SECRET
Foreign and Commonwealth Office London SW1
Telephone 01-
RECEIVED IN
REISTRY No. 51
SEP 1973
HKK5
Mrs RE J Gilmore
HM Treasury
Dean Rosalind
STERLING AGREEMENTS:
Your reference
Our reference
MF 9/501/1
Date
4 September 1973
SMALLER DEPENDENT TERRITORIES
PA.
123
11.12
1.
As agreed, I am writing formally to send the FCO's view that our special responsibilities to the smaller Dependent Territories (i.e. other than Hong Kong, Belize and Bermuda) require that HMG should treat them more favourably than other recipients of the proposed Unilateral Declaration, by making their eligible balances, those held on the last working day of March 1974 rather than the lower of those and balances held on 24 september 1973.
2.
We have not so far been able to trace any requirement, other than their obligations under their Sterling Agreements, for these territories to hold all or most of their reserves in Sterling, but they lack the resources financial or personnel - to do otherwise, and we would not wish them to try. Consequently we ought to guarantee any increases in their holdings of sterling after 24 September. (Many of them are dependent on budgetary support grants-in-aid, so their holdings on that date might be untypically low).
3.
The possible costs of such a concession would not, I imagine, be large. And if other holders got to hear of it, we could reasonably defend it on the grounds of our special responsibilities to, and the special conditions in, the territories concerned.
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D I Lewty
Financial Relations Dept
Mr R E Barber (Bank of England) Mr F J McGinley (GGD)
West Indian and Atlantic Dept Pacific Dependent Territories Dept Hong Kong and Indian Ocean Dept Mr WE C Franklin (Economists Dept) Mr R K Batstone (Legal Advisers)