TNAG-0126-FCO40-162-Sterling-balances-1970 — Page 89

CYPHER/CAT A

IMMEDIATE HONG KONG

TELEGRAM NO.2219

SECRET

SECRET

R+PA K$16

6

TO FOREIGN AND COMMONWEALTH OFFICE

2 DECEMBER 1968

ADDRESSED FCO TELEGRAM NO, 2219 OF 2ND DECEMBER.

7、

YOUR TELEGRAM 1615 : EXCHANGE FUND AMENDMENT BILL.

INTENTION IS THAT EXCHANGE FUND BORROW HONG KONG DOLLARS FROM

BANKS, PURCHASE THEIR ELIGIBLE STERLING ASSETS THEREWITH AND RE-

DEPOSIT IN STERLING WITH BANKS. THERE WOULD BE STRICT PROVISIONS

TO ENSURE THAT BANKS WERE AT ALL TIMES FİRM HOLDERS OF UNDERLYING

STERLING ASSETS OF TYPE ELIGIBLE FOR GUARANTEE IN AMOUNT OF AT

LEAST EXCHANGE FUND STERLING DEPOSITS WITH THEM. IN ANY EVENT, WE

ASSUME THAT IN THE EVENT OF YOUR EVER HAVING TO IMPLEMENT STERLING

GUARANTEE, WE WILL BE REQUIRED, AS A MATTER OF COURSE, TO SATISFY

YOU OF THIS. WE, THEREFORE, OURSELVES HAVE REASON TO TAKE THIS

PRECAUTION.

2. 1 MIGHT ADD THAT STERLING COUNTERPART OF HONG KONG DOLLAR

BALANCES OF BRANCH AND CORRESPONDENT BANKS WITH HONG KONG BANKS. WILL

BE ELIGIBLE FOR THIS FACILITY ONLY WITHIN APPROVED LIMITS.

3. BILL IS DOWN FOR COMPLETION OF SECOND READING, COMMITTEE STAGE

AND THIRD READING ON 4TH DECEMBER. GRATEFUL FOR VERY EARLY REPLY.

SIR D.

TRENCH

FILE S

F.P.A.D.

H.K.D.

LART

MR.

COMBS

RES.

کی

MR.

MORETON

LEGAL ADVISER

NEXT

REE.

SECRET