X
CONFIDENTIAL
BY MUFAX
To: From:
Mrs.M.E.Hedley Miller, H.M.Treasury P.B.Rackham, Bank of England
Copies to!
Draft Telegram to Hong Kong, enclosed with
Your letter of 31. 7.73 to Miss Pestell
61
Miss C..Pesteli Mr R.B.Crowson
REGISTRY
The last sentences of paras.2 and 6 respectively
- SAUC 1973
HKK5|
reference to Chancellor's message in para.4, could by implication raise false hopes in Hong Kong. The tone of paras.4 and 5 may be counter- productive. The following amendments to the draft are therefore suggested:
Para.2 last sentence !
replace by "We hope this will reassure you that considerable thought is being given to the question and that the assumption expressed in your para. 5 that no arrangements will be made in relation to official £g balances after 24th September is not the only reasonable one that can be made".
Paras.4 and 5:
replace by new para:
"We are also disturbed by the prospect of forward sales by the banks mentioned in your telno 761. In order to minimise such operations, we are prepared to authorise the withdrawal from the Exchange Fund by the commercial banks of a maximum of £20 mn. in August 1973 and £20 mm. in September 1973, these s
to be distributed among the banks as the Financial Secretary judges best. We therefore hope that the Financial Secretary, so far from advising the commercial banks to diversify, will seek to influence them in
A fortiori such a way as to avoid their taking precipitate action. there should be no diversification either spot or forward of the Government's holdings".
Para 6: delete last sentence and add to end of first sentence: "...at any time, although, as will be evident from the Chancellor's message, we are not at present in a position to offer any further concrete proposals".
B..
2/8/73