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[TEXT] Personal for Govenor and Maddon - Cove.
YOUR TELEGRAMS 728 & 741.
STERLING AGREEMENTS.
The present disturbed situation in the foreign exchange
markets is having unpleasant consequences for all of us.
The maintenance of the MSP is however an essential part of
all Sterling Agreements, and the guarantee is dependent
upon it. A breach of MSP therefore has, legally, the
effect of terminating the guarantee. We regret, therefore,
that it is not possible for us to agree to the request in
your telegram 728.
2. We are, however, prepared in the special circumstances
not to regard the minor breach reported in your telegram
741 as a formal breach of the Agreement, on the understanding
that the proportion of sterling in your total reserves
/falls