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Wednesday, December 13, 1972
the U.S. dollar. We had in mind a new agreement to replace the present
agreement and to run through perhaps to 1975, At that time we expected
the discussions to be resumed at an early date. but some other sterling
area countries were not willing to commit themselves to a renegotiation
of the Agreements and the British Government, for its part, was not
willing to negotiate with some countries only. We regarded this situation
as entirely unsatisfactory from our point of view and kept up a telegraphic
correspondence with London stressing the need for an early resumption of
the July talks. As part of this process I called on Treasury officials
in London in September. I said that, provided the terma were right we
were willing to enter into another agreement for a period of, say, three
years; and that, while we understood that there might be good reasons why
other countries did not wish to commit themselves at that stage, their
positions were different to Hong Kong's and their needs likewise. For
instance, the minimum proportions of their external reserves (their
M.S. Ps.) which have to be kept in sterling are much lower than Hong Kong's
89%
-
So we kept on representing to the British Government that, if the
Sterling Guarantee Agreements could not be re-negotiated before the spring
of next year so that all concerned would know where they stood then at least
the British Government should recognize that we were placed and through
no fault of our own – in a peculiarly difficult position. Both the Hong
Kong Government and the banks faced the possibility of having a large
unprotected sterling position at the expiry of the present Agreement
/on
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