G.F. 174
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(c) that, should gilt edged prices fall
during the guarantee period, depreciation
in current values would not be made up by
further purchases of sterling.
2. In amplification of paragraph 1(a)
above, I should point out that the restoration
of our M.S.P. would require us:
either to buy sterling assets worth
«1257 million or £317 million against
Hong Kong dollars (depending on
whether the banks' residual sterling
positions are included or not) ;
or to switch non-sterling assets worth
120 million or E34 million out of
a total of £82 million (again
depending on whether the banks'
residual sterling positions are
included ornet).
The first course is quite impractical and the
second would be imprudent and could not be
defended politically.
3. I should be glad of the Treasury's early
reactions for I am anxious to see this question
settled one way or another, as soon as possible.