securities.
We would see difficulty in any other approach, and
trust that in the circumstances you will not seek one.
4. The modification described in para 2 above should now enable
Hong Kong to participate in the arrangement. There would seem to
be no merit in seeking out 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. 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 commerical bank
holdings. The exclusion of the commercial banks in the new
arrangement merely 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 warrant
their inclusion. The level of Hong Kong's MSP has not been disclosed
in the past and we suggest that it should not be disclosed now.
it could be indicated, in response to questions, that the terms for
compliance in the arrangement by Hong Kong do take account of the
fact that the commercial banks are no longer included.
But
5.
We would be grateful to have confirmation of Hong Kong's
intention to participate on the basis outlined above.
Please let
us know of any other presentational points that occur to you.