DRAFT TELEGRAM TO HONG KONG
THE PRESENT STERLING GUARANTEE
It appears from contact between your Accountant General and
Payton of the Bank of England that there is a difference
between us on the interpretation of the accidential breach
provision in paragraph 2 of our telegram No. 1209 of 26
November 1973.
This provision means that a purely accidental breach at the
end of any one month will be condoned, not therefore detracting
from eligibility for the guarantee, provided that there is no
breach at the end of the following month.
We now understand that the Accountant General has interpreted
this provision differently, to mean that IMG will regard a
breach as accidental provided that an amount of sterling
equivalent to the amount of any breach at the end of one
month is purchased in the following month. It was not HMG's
intention that the provision should be interpreted in this
way and we do not see a valid basis for any interpretation
impara 2
other than that given a above.
However, we accept that there has been a genuine misunder-
standing on this matter on the part of Hong Kong and that
purchasers of sterling have been made in good faith on the
basis of your interpretation of the provision.
As an
exceptional step therefore, we would be prepared to accept
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