I 9/501/1
CONFIDENTIAL
RE REGISTRY No. 51
22 FEB 1974
10KKS/D
Your ref: 2F(RMSA) 120/05
D A Walker Esq HM Treasury
в
Ms Wither
Mrs Thalik
confirmed
PA
Mi
Foreign and Commonwealth Office
London S.W.1
19 February 1974
Dear David,
STERLING GUARANTEES: MINOR DEPENDENCIES
NEXT
REF.
We spoke on the 'phone yesterday about whether or not we should extend the 10% reduction in MSPs to the minor dependencies. I said that I thought this would not be necessary; but that I would let you have a more considered FCO view.
2. I am now able to confirm that we see no need for such action. We did not make this extension in 1971, when the MSPS of other sterling holders were reduced; and there were no complaints then. Furthermore, a number of the territories concerned would be precluded by other legislation from taking full advantage of such a reduction were it to be offered. A final consideration is that, because of the administrative complications involved, it would not be easy to make this extension.
G
3.
I believe the Bank share these views; and, since i understand that you yourself are not insisting that we should take action with the minor dependencies, perhaps we can agree to leave well alone. I suggest that we need not draw the dependencies' attention to this discrepancy when we inform them of the new guarantee arrangements. If any of them should complain though, as I say, we do not think this is likel · -- then I think we can justifiably point to the more favourable treatment they already get in that the guarantee applies to rising reserves. Nevertheless, as I said yesterday, I think that we should be prepared to look at the question again should any of these dependencies argue in favour of the 10% MSP reduction being extended to them as well; and I understood you to say that there would probably be no difficulty about this from your point of view.
Your Simarely
John
SJG CAMBRIDGE Financial Relations Department
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