the Hong Kong representatives had returned to Hong Kong, stating that there were a number of additional "consequential details" which would have to be put to Hong Kong. These were:
4.
(a) in the event of any default at the fourteen day point,
ECGD would have the right to call the whole of the debt; (b) ECGD would have the right to pursue if the Hong Kong Government account were to be removed from the Crown Agents (i.e. the Government's London agents);
(c) ECGD require an undertaking that the Hong Kong Government
keep a minimum balance with the Crown Agents or whatever London agents they appoint.
Frankly we can ot accept that these are "consequential details". They seem to us in fact to reopen to a very large extent the political point we thought we had settled in our last talk with the Hong Kong representatives. And now there is a very big new factor, namely the fact of the devaluation of sterling. Hong Kong is now the second largest holder of sterling in the world. On several occasions in the past two or three years a number of the local unofficials have raised the question of Hong Kong being allowed to move some of their reserves out of sterling into other currencies, as a hedge against a possible devaluation. We have had to tell them that we could not agree to their doing so, because of the effect it could have on other holders of sterling if they saw a British Colony, which was also the major holder of sterling in the world, moving partially into other currencies. But there are very strong feelings in Hong Kong on the subject now that devaluation has actually occurred, especially among the Chinese unofficials. The bank of England official who has just visited Ing Kong has telegraphed about the cnsiderable bitterness and resentment he has encountered on this issue. A ainst tis background we cannot possibly put to Hong Kong the additional stipulations sought by ECGD. And in any event we would question whether it would be right to do so. e can quite see that if Hung Kong were an independent country these extra guarantees would be justifiable. But in the case of Hong Kong they are in our view neither justifiable nor necessary. The Hong Kong Government has an unblemished financial record. Beyond that, it is also the Government of a Crown Colony,
and
No comments yet.
Private notes are available after approval.