X
but hope that
this
modification
will now
enable
Stany Keng
t
pinticipate
in the anangsment.
DRAFT TELEGRAM TO HONG KONG
STERLING GUARANTEES
(W/210)
We have consulted Ministers and can now reply substantively to
No
the proposal in your telegram 1117.
2. We can effectively accept the main feature of this proposal,
but need to translate it into terms which are as compatible as
possible with the guarantee offer which others have accepted more
or less as it stands.
3.
We accordingly agree that the new arrangements should extend
On only to the sterling holdings of the Hong Kong Government.
the basis that Government sterling holdings were SMA 348 million on 26 September (after adjustment is made for the 18 million
compensation to the commercial banks under the Exchange Fund Guarantee Scheme) and that total official external reserves were
.434 million, the sterling proportion on that date was
approximately 80 per cent. Given that the sterling holdings of
can accept the banks will not be covered by the arrangement, we enneidon 14
appropriate that references in paragraph 3 of the Declaration to
minimum sterling proportion should be read as referring to a
minimum sterling proportion of 80 per cent. This is the only
modification necessary to deal with the non-participation of the
commercial banks and, consistently with our general approach, the
terms of the Declaration remain unchanged in other respects.
NO
5. Paragraph 10 of telegram 1117 refers to the implications
for minimum sterling holdings of a fall in the price of gilts.
The terms of the unilateral offer are, however, no different
in this respect from those of the previous Agreements, and
involve acceptance on our part of the results of your statutory arrangements for valuation for calculation both of MSP and of
amounts payable if the guarantee is implemented.
It seems to
1