Code
INWARD TELEGRAM
28 MAY
1 X X
1947
E
COPY FOR RESTRATIO
OEIVED
IN
54
jol
FROM HONG KONG (0.A.0.)
TO S. OF S. COLONIES.
D. 25th May, 1947
R. 25th
17 10.00 hrs.
No.889
My telcgram No.622. (46)
Loan.
There is a possible method of avoiding any increase from $100,000,000 to $150,000,000 in the limit for the loan which is to te raised locally.
2. On 31st March, in addition to securities, including Treasury bille, to the value of approximately £(sterling)13,500,000 held by the Crown Agents, the Exchange Fund had a sum of £(sterling) 12,500,000 on
£26. deposit with the Joint Colonial Fund. The total notej circulation at that date was in the region of $500,000,000 made up of 84.20,000,000 covered by the Exchange Fund plus $80,000,000 Fiduciary issue or issues covered by deposits of the issuing banks' own securities.
VOO COO
3. It is extremely unlikely that the circulation to be covered by the Exchange Fund will ever fall below £200,000,000 and it seems quite unnecessary that 2(sterling) 12,500,000 should be immobilised to cover the liability of such a minimum circulation. It is difficult to imagine any circumstances in which that liability would over have to be met and it seems to me that a portion of this sum might be borrowed by the Government. The proposal is, perhaps, somewhat unorthodox but for all practical purposes it appears to be immaterial whether the money is deposited with the Joint Colonial Fund Loan/to Colonial Governments, including Hong Kong, or whether it is loaned direct to
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