RECEIVED IN REGISTRY No. 51 - 1 NOV 1973
COVERING SECRET
Mr Aust (Legal Advisers)
STERLING ARRANGEMENTS
Discussed with ther. Howard a fold
we agree to rext including
Laury we apre
لمسلية دميا
To Tell Jay
I have asked he ith wik is would be useful
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to refer to like Governors pour concerning
1.
I enclose a copy of a self-explanatory letter from Mr Walker in the Treasury with which he encloses three draft letters to Australia, Ireland and Hong Kong
2.
I should be grateful for your confirmation that the are all right legally, and also offer the following comments:
(a) Australia
the position if its HK's reserves increase
Unley
and whether th Washing holding ge day
would need to raise their hawe s and this 120
said the amends could Paragraph 1, lines 2-3: The words "Reserve Bank" remain should presumably read "The Reserve Bank of Australia".
PA
as wow.
Paragraph 3, lines 2-3: Need we spell out that we are prepared "to offer a modification of the guarantee"? Could the first two sentences not be run together as follows-
I am now writing
to let you know that we would be prepared to accept .." etc, etc?
(b) Ireland
No comments.
(c) Hong Kong
1
Paragraph 2: We should try to avoid using the word "appropriate" in successive sentences.
Paragraph 4: I wonder whether the line suggested would meet the Hong Kong Government's need to be able to demonstrate to local opinion that their representations had not been fruitless. The present suggested line might bring us the worst of both worlds in that it would be insufficient for Hong Kong and yet would be clear to others that a reduction in MSP had been given to Hong Kong. I therefore suggest that the following be added to the last sentence of paragraph 4 - "by means of a lowering of MSP to the extent required to ensure that the Hong Kong Government is not obliged to increase its holdings of sterling in order to compensate for the withdrawal of the sterling formerly held by the commercial banks".
Mher's
D I Lewty
$
Financial Relations Department
fix
多いと
30 October 1973
Copies to: Mr Franklin (Economists)
Miss Pestell (FRD) Mr Goodfellow (HKÍOD),
✓
COVERING SECRET
Mr Clark (SWPD) Mr Donnelly (RID) ·
OD 145177 219242 500M 4/73 GM 3643/2