IMMEDIATE

GR 160

DESKBY 1702ZOZ CYPHER/CAT A

FM F C 0 161745Z

CONFIDENTIAL

ORWELL

DESKBY 170200Z

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LASF

REF.

48A

PA

1/2011

(FRD)

TO IMMEDIATE GOVERNOR HONG KONG TELNO 693 OF 16 JULY 1973.

YOURTEL NO 775: STERLING AGREEMENT.

1. WHILST WE UNDERSTAND THE PROBLEMS YOU ARE NOW FACING, YOU

WILL APPRECIATE THAT CURRENT UNCERTAINTIES ARE CREATING DIFFICULTIES

FOR ALL OF US. WE SHOULD PREFER THE FINANCIAL SECRETARY TO REFLECT

THIS AND TO REPLY IN MORE GENERAL TERMS, AS FOLLOWS:

QUOTE I WOULD AGREE WITH MY HONOURABLE FRIEND THAT IN VIEW OF THE

UNCERTAINTIES OF THE WORLD MONETARY SITUATION, A DECISION ABOUT THE

FUTURE OF THE STERLING AGREEMENTS WOULD BE HELPFUL. NEGOTIATIONS

HAVE NOT STARTED, BUT WE ARE IN CLOSE TOUCH WITH HMG IN THE UK TO

WHOM WE HAVE EXPRESSED OUR ANXIETIES. I ASK HONOURABLE MEMBERS TO

ACCEPT MY ASSURANCE THAT THE GOVERNMENT IS WELL AWARE OF THE GREAT IMPORTANCE OF THESE ISSUES, IS KEEPING THE SITUATION UNDER CONSTANT REVIEW, AND IS IN CLOSE TOUCH WITH OUR BANKERS UNQUOTE.

2. WE SHALL LET YOU HAVE A REPLY TO THE CTHER POINTS IN YOURTEL

NO. 761 AS SOON AS POSSIBLE.

DOUGLAS-HOME

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HKIND.

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