us reasonable that you should similarly accept the consequences
of these arrangements.
While the terms of the unilateral
Declaration, taken in conjunction with your statutory basis
of the valuation, may require purchases if a new book valuation
reflects a fall in the price of securities, they may,
symmetrically, permit sales if the price of securities rises.
We would see some difficulty in any other approach and hope
Mess this. that in the circumstances you will not seek one.
So We hope that the modification described in paragraph 3-
ADOVE NOW crables Hong Kong to participate in the arrangement- ofthero anaugomento On presentational aspects, it is most important that news should not reach other participants in the guarantee arrange-
ment in a way that causes them to think that Hong Kong has been
We know that singled out for specially favourable treatment.
and hope Have
will 6. you beable to
impross the print on
one Kecutive
Connil
X.
Edutoro
you appreciate this The best outcome would of course be that there should be no publicity, but if or when questions come up
we suggest that the line to take is that discussions between
HMG and the Hong Kong authorities have produced a result that is satisfactory to both sides, and that Hong Kong is
participating in the arrangement and enjoys the guarantee in
respect of official sterling holdings.
7. The response to questions about the position of the
commercial banks might be that the previous Agreements with
Hong Kong were entirely special in extending to commercial bank
holdings. The exclusion of the commercial banks in the new
arrangement brings the position of Hong Kong into line with
that of other holders and reflects the fact that commercial bank
sterling holdings are no longer judged to be sufficient to
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