GRPS 350
IMMEDIATE
CYPHER/CAT A
FM HONG KONG 020212Z
SECRET
/ORWELL/
SECRET
حملہ کیا
LANT
R.PT.
REF.
G & G (63)
la
TO IMMEDIATE F C O TELNO 849 OF 2ND AUGUST, 1973.
YOUR TELEGRAMS 742 AND 743.
STERLING GUARANTEE AGREEMENTS.
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WE HOPE TO RECEIVE A REPLY TO OUR TELEGRAM 817 IN SPECIFIC TERMS VERY SOON, BUT WE OFFER THE FOLLOWING POINTS IN CONNECTION WITH THE CHANCELLOR'S MESSAGE INADDITION TO THOSE ALREADY MADE ON THE QUESTION
OF FUTURE ARRANGEMENTS FOR OUR SUBSTANTIAL STERLING BALANCES
OVER THE PAST 12 MONTHS.
2. WE COULD NOT MAINTAIN HONG KONG'S AGGREGATE STERLING HOLDINGS
AT ROUGHLY THEIR PRESENT LEVEL (OR THEIR LEVEL AT A PARTICULAR DATE) WITHOUT THE CONCURRENCE OF THE BANKS. THE BANKS, FOR THEIR PART, WOULD NOT BE PREPARED TO UNDERTAKE TO MAINTAIN THEIR STERLING
HOLDINGS AT A GIVEN LEVEL UNLESS SOME GUARANTEE WERE OFFERED TO THEM AND WE ARE NOT PRPEPARED EVEN TO CONSIDER A GUARANTEE UNTIL WE KNOW PRECISELY WHAT ARRANGEMENTS H.M.G. HAVE IN MIND FOR THE PERIOD AFTER 24TH SEPTEMBER. THE FACT IS, NOW THAT THE STERLING AREA EXCHANGE CONTROL RULES NO LONGER APPLY, AND THE BANKS THEREFORE, NEED NOT KEEP THEIR EXCESS LIQUIDITY IN STERLING, WE ARE QUITE HAPPY TO LEAVE IT TO THEM TO MANAGE THEIR OWN
EXTERNAL ASSETS IN FUTURE AND BEAR THEIR OWN EXCHANGE RISKS: AND WE CERTAINLY DO NOT WISH TO ASSUME DIRECT OWNERSHIP OF THEIR STERLING ASSETS (C.F. PARAGRAPH 5 OF OUR TELEGRAM 817). THE BANKS ARE ALREADY MAKING PLANS TO DIVERSIFY OUT OF STERLING AND, BY THE END OF THIS MONTH, WILL MOST LIKELY HAVE COMMITTED THEMSEELVES. IT FOLLOWS, THEREFORE, THAT IF H.M.G. WISHES US TO ATTEMPT TO PERSUADE THE BANKS TO KEEP THEIR STERLING HOLDINGS INTACT WE MUST KNOW WHAT
THE TREASURY HAVE IN MIND VERY SHORTLY.
13. AS REGARDS
SECRET
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