TNAG-0056-FCO40-92-Evacuation-plan-1967 — Page 25

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Chinoso Govorimont in third countries and to convert thom into other

curroncios. The purpose would be to ensure effective use of the assets by

forestalling any blocking by Hor Majosty's Governmont, and also porhaps to

ombarrass Hor Majosty's Governmont by bringing pressure on storling. Not

loast because of tho scalo of the suns in question, convorsion into other currencies would involve considerable problems (especially since the Chinoso

would presumably not wish to convert into United States dollars). Wo must

novertholoss plan on the assumption that the conversion would be attempted.

6. The counter-action to stop this would be for Hor Majesty's Government

immodiatoly to block all Hong Kong sterling balancos. As is woll known,

blocking is a gravo stop, which must always carry risks to the confidonco

of other holders of storling balancos. But in tho circumstancos horo

onvisaged, other starling holders would probably rogard it as necessary and justified by a situation analagous to a stato of war and croatod by an act of violent aggression. The risk to the stability of other storling

balancos, and to consequent prossuro on sterling, may therefore be ignored. (This is not to say that the political situation onvisaged would not for

other reasons causo pressure on storling). Wo would not of course loave

the world to form its own judgmont about the effect on sterling:

should have to present the case with the groatost caro at the time wo

brought blocking arrangements into forco.

WO

7. The balancos could bo blocked within 24-hours by administrativo

action undor en oxisting Order which is in forco undor Soction 2 of the Emergency Laws (Ro-cnactments and Ropoals) Act 1964. Any payment from

a Hong Kong account would therefore roquire the specific consent of the

Treasury. This would apply not only to monoy already on Hong Kong accounts, but to any monoy subsequently finding its way thoro. It would

also apply to Treasury Bills and scouri tios in the United Kingdon standing in the name of Hong Kong rosidents. (Dotails of the balances and of tho rolovant logal powers are in Appendices I and II).

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