GRPS 765
PRIORITY
CYPHER/CAT A
SECRET
RECAVED IN
REGISTRY No.51
نگاشته
-3 OCT 1973
NEXT
REF
ling (193
NICKS
дже
1174
FM HONG KONG 020750Z
SECRET [ORWELL ]
TO PRIORITY F C O TELNO 1117 OF 2ND OCTOBER, 1973.
FA
عم
171
STERLING GUARANTEES.
4/1
WE WERE GRATEFUL FOR THE TIME SPENT AT DAR ES SALAAM ON DISCUSSION OF OUR PROBLEMS OVER PARTICIPATION IN THE GUARANTEE AS OFFERED.
2. THE BASIC DIFFICULTY IS THAT OWING TO FORWARD SALES BY THE BANKS THE OLD M.S.P, BASED AS IT WAS FOR HONG KONG ON A DEFINITION OF OFFICIAL STERLING RESERVES WHICH INCLUDED BANK ASSETS, IS NOW IMPRACTICABLE, AS YOU KNOW WE HAD NO POWER TO PREVENT THESE SALES AND CONSTANTLY WARNED THE TREASURY THAT THEY WERE INEVITABLE UNLESS SUCCESSOR ARRANGEMENTS TO THE PREVIOUS GUARANTEE COULD BE OFFERED WELL IN ADVANCE. WE FULLY UNDERSTAND WHY THIS WAS NOT POSSIBLE BUT WE NOW HAVE TO FACE THE NEW SITUATION,
3. DISCUSSION WITH THE BANKS INDICATES THAT IN ANY CASE THEY WOULD HAVE LITTLE OR NO INTEREST IN BENEFITING FROM THE TYPE OF GUARANTEE OFFERED. NOR WOULD THEY BE WILLING TO RE-VIND THEIR FORWARD SALES. I HAVE INCREASINGLY FELT HERE THAT OUR SITUATION HAD COME TO BE GREATLY COMPLICATED BY THE INCLUSION OF THE BANK FUNDS, AND I THINK THE BALANCE OF ADVANTAGE NOW LIES IN ACCEPTING THEIR EXCLUSION FROM ANY FURTHER ARRANGEMENT, AND AS STATED ABOVE I DO NOT BELIEVE IT WOULD BE PRACTICABLE TO ATTEMPT TO DO SO.
4.
THIS LEAVES US WITH THE GOVERNMENT'S OWN HOLDINGS. IN RESPECT OF THESE THERE HAVE OF COURSE BEEN NO FORWARD SALES OR ANY ALTERATION EXCEPT THAT COMPENSATION HAS BEEN PAID TO THE BANKS UNDER THE GOVERNMENT/BANKS GUARANTEE SCHEME.
5.
THE M.S.P. IN RESPECT OF THE GOVERNMENT'S EXTERNAL RESERVES
AT THE CLOSE OF 24TH. SEPTEMBER WAS APPROXIMATELY 80.9 PER CENT./6.
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