XCS(73)9
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Statement III:
Position after 24th September 1973
(after allowing for compensation payments in sterling in settlement of Exchange Fund Guarantee Scheme and on assumption that bank-owned sterling assets are not covered by a further arrangement through the Exchange Fund)
£mn
(1) Sterling assets
347
(2) Non-Sterling assets
82
(3) Total Official Sterling Reserves
347
(4) Total Official External Reserves
429
Minimum Sterling Proportion
80.9%
The restoration of our M.S.P. to 89% could be effected
in three ways:
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(a)
(b)
(c)
by persuading the banks to re-wind their positions by purchasing sterling against foreign currencies or Hong Kong dollars;
by the Government (Exchange Fund and General Account) buying sterling assets worth £257 million (Statement ¤; £407 million + £257 mn = £664 mn = 89% of £746 mn)
or £317 mn (Statement III: £347 mn + £317 mn = £664 mn = 89% of £746 mn);
by Government switching non-sterling assets worth about £28 mn (Statement II: £82 mn
£28 mn = £54 mn = 11% of £489 mn)
or £34 mn (Statement III: £82 mn
Ma
£34 mn
= £48 mn = 11% of £429 mn) into sterling assets
As regards (a): there is no chance that the banks would wish to do this particularly as there can be no question of another Hong Kong dollar guarantee through the Exchange Fund and a US dollar guarantee is unlikely to be acceptable to them. As regards (b);
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