SECRET
the Sterling Agreements as references to an
MSP of 78%.
3.
Acceptance of current market value for the
calculation of minimum sterling holding means of
course that this basis would be used in the
calculation of any implementation payment and indeed
for all purposes of the Declaration.
4. We also draw attention to para 5 of our tel no 1133
which applies mutatis mutandis with the modified
valuation basis. This means that there may be
circumstances, even on the market valutation
basis, in which sterling purchases are required
consistently with the terms of the Declaration.
We interpret para 2 of your tel no 1361 as indicating
that you accept this, but would be grateful for
confirmation that there is no misunderstanding on
this point.
5. We have felt able to accept this switch to
market valuation and a lower MSP corresponding
to that basis, in the light of your special difficulties
in this matter, which we recognise.
But it is most
unlikely that other holders would see this modification
in the same light, and it is therefore essentfl
that it should not be publicised.
We must DOM
stick to the line set out in para 7 of our tel
no 1133, namely that Hong Kong's participation
is based on the reierve position af at the expiry
of the former Agreement, but with adjustments
made to take account of the non-participation
of the banks in the new arrangement.
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