SECRET
IMMEDIATE
CYPHER/CAT A
AND BY BAG
GPs 490
FM F C O $81910Z
SECRET
ORWELL
DESK BY 110700Z
'
Entu
RECE IN
REGI
HKK 5/10.
1974-
TO IMMEDIATE BELMOPAN TELNO. 186 OF 8 NOVEMBER^AND SAVING TO
CERTAIN OTHER POSTS.
MIPT: STERLING GUARANTEES.
p.a.
Tay
1/33
(97)
RE
1. FOLLOWING IS TEXT OF MESSAGE:
NC. A
#
BEGINS:
1. SINCE THE ORIGINAL STERLING AGREEMENTS EXPIRED IN SEPTEMBER 1973, THE BRITISH GOVERNMENT HAS MADE TWO LIMITED EXTENSIONS OF THE GUARANTEE OF CERTAIN OFFICIAL BALANCES. THE PRESENT ARRANGEMENT EXPIRES AT THE END OF THE YEAR AND, SO THAT YOU AND OTHER PARTICIPANTS WOULD BE AWARE OF OUR INTENTIONS IN GOOD TIME, I THOUGHT THAT I SHOULD COME TO AN EARLY DECISION ABOUT WHAT SHOULD HAPPEN THEN.
2. STERLING GUARANTEES HAVE IN THE PAST MADE AN IMPORTANT CONTRIBUTION TO INTERNATIONAL FINANCIAL STABILITY. BUT THEIR RELEVANCE HAS DIMINISHED SUBSTANTIALLY IN THE WAKE OF THE RECENT MASSIVE CHANGES IN THE INTERNATIONAL FINANCIAL SITUATION AND THE ASSOCIATED SHIFT IN THE PATTERN OF PAYMENT IMBALANCES THAT THIS HAS IMPLIED. GUARANTEES WERE ORIGINALLY DESIGNED IN 1968 TO ACHIEVE STABILITY OF EXISTING HOLDINGS. IN THE PRESENT SITUATION, HOWEVER, MANY HOLDERS (OTHER THAN THE OIL EXPORTERS) EITHER FACE THE NEED TO DRAW DOWN THEIR HOLDINGS TO MEET PAYMENTS DEFICITS OR, HAVING BORROWED FOREIGN CURRENCY TO STABILISE THEIR RESERVES, HAVE A NEED FOR GREATER FLEXIBILITY IN THE MANAGEMENT OF THEIR EXTERNAL ASSETS THAN CAN BE ACCOMMODATED VERY READILY IN ANY GUARANTEE ARRANGEMENT.
釁
SECRET
98
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