XN000022-1973-03-15 — Page 2

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Thursday, March 15, 1973

BRITAIN URGED TO GUARANTEE H.K. STERLING ASSETS

Proposal To Develop Foreign Currency Market Welcomed

The Government was today urged to ask the British Government to guarantee all or at least a substantial part of Hong Kong's Sterling assets in terms of Hong Kong Dollar or in gold.

Debate.

The proposal was made by the Hon. Q.W. Lee at the annual Budget

He recalled that Hong Kong's external assets had been depleted twice in recent months.

Despite this, Hong Kong Dollar was still faced with the dilemma of further uncertainties because of the current international monetary

problems.

The urgent question now confronting Hong Kong, he said, was how

best "to protect the value of our reserves."

He said: "It is contrary to economic sense for a territory with

a sound economy such as ours to hold most of its reserves in the currency of a country such as Britain whose economy is full of uncertainties and problems.

"If for any reason we still have to keep a greater part of our reserves in Sterling, we must be given more effective protection by the British Government against future weakness of the Pound."

Otherwise, he said, there seemed to be "no other solution except

for us to run down the bulk of our Sterling holdings and to seek diversification into other forms of investments."

/Mr. Lee