CONFIDENTIAL

this reason, past friction on this subject appears to have died

down.

Line to Take

4.

We are glad that a satisfactory arrangement has been worked out

to allow Hong Kong to participate in the present six-month guarantee.

This is plainly in the interest of Hong Kong as well as of the UK.

Árady?

5. We have taken no decisions yet about possible arrangements for

the period after March. We are consulting Hong Kong and other

sterling holders on this and aim to indicate our conclusions in good

time before expiry of the present arrangement.

Hong Kong and Indian Ocean Department 11 January 1974

CONFIDENTIAL

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