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Wednesday, March 28, 1973
H.K. TO PRESS BRITAIN FOR CLARIFICATION
On Sterling Guarantee Arrangements
Hong Kong will continue to press the British government for
clarification of their future intentions regarding the present sterling
guarantee arrangements.
This undertaking was given today by the Financial Secretary, the
Hon. C.P. Haddon-Cave, when winding up the resumed budget debate.
Referring to a suggestion by the Hon. Q.W. Lee, the Financial
Secretary said that the British government was not prepared to guarantee all
or at least a substantial part of Hong Kong's sterling assets in terms
of the Hong Kong dollar or gold.
The U.K. Government, he added, had indicated that any extension
of the present guarantee arrangements must continue to be expressed in
terms of the U.S. dollar, which was the only alternative reserve currency to
sterling for any substantial block of assets.
"I am afraid, therefore, that fluctuations in the value of our
reserves is a price we have to pay for the instability in world currency
markets, but we live also, remember, in a world of high interest rates," he said.
The Financial Secretary said that Hong Kong had now diversified its
total official external reserves up to the limit of its 10 per cent
diversification facility, having regard to daily shifts in prices of various
securities and relative currency values.
This,
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