PRESENT:
CONFIDENTIAL
Hong Kong Sterling Discussiona
Record of a Meeting held in Room 11 Second Floor. Treasury Chambers at 2.30 p.m. on Thursday 29th May, 1969
Mr. A. Mackay, (in the Chair) Mr. J. A. Marshall
Mr. R. Hay
Mr. N. A. Nagler, (Secretary)
Mr. T. J. O'Brien ) FCO
Mr. R. H. Turner
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RECEIVED IN
REGISTRY No.47
17 JUL 1969
H.M. Treasury
Mr. R. Marshall
}
Bank of England
Hong Kong
Sir J. Cowperthwaite ) Financial Secretary
Mr. Paterson) Exchange Controller,
Hong Kong
Welcoming Sir J. Cowperthwaite, Mr. Mackay said that we were
very glad to discuss with him the difficulty which had arisen about
the operation of Hong Kong's arrangementx for guaranteeing the
sterling funds of her commercial banks. The United Kingdom accepted
that there were special features in Hong Kong which made it appropriate
to guarantee at least some of the commercial bank's sterling balances.
But the arrangements made by the Hong Kong authorities with the banks
appeared to make Hong Kong an attractive place for non-resident funds
and to give the banks an incentive to increase their sterling assets
by attracting funds from elsewhere. When Mr. Bell had been in
Hong Kong he had made plain our unwillingness to see included within
the United Kingdom's sterling guarantee the counterpart of deposits
made by non-Hong Kong residents and had explained that we would not
wish to lose the ability to control the extent of our guarantee so as
to exclude non-resident funds, which. we had through the Exchange Fund
borrowing limit, unless we were satisfied that Hong Kong's -EVED IN
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21 JUL 1969
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Hong Kong Dept.
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