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Reference...
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SECRET
Mr. Carter, Hong Kong Dept.
Finance of Import Deposits
F.C.0. Telegram No. 1617 to Hong Kong
I attach a copy of a telegram which I sent out late on Friday night at the request of the Bank of England.
2.
This telegram explains why you personally have not been bothered by the Hong Kong Government on this subject. They have been pursuing with the Bank of England their proposals for financing import deposits from Hong Kong funds.
3. As you will see, Hong Kong Bank sterling bal- ances which are transferred as bulk six-month de- posits with H.M. Customs would still be treated as official sterling reserves for the purposes of the recent Sterling Agreement between the U.K. and Hong Kong Governments (Basle and all that). Neither the Treasury nor the Bank nor F.P.A.D. approve of this at all since it enables the Hong Kong Government to transfer its holdings from Treasury Bill Issue etc. into import deposits, thereby weakening the effects of the Import Deposit Scheme. But for some techni- cal reason which I do not understand, H.M. Customs have so drafted their regulations that they under- take to repay six-month deposits either to the importer or to whatever other person originally subscribed the deposit. Having admitted an official obligation to repay, import deposits subscribed by oversea governments cannot fail to be official liabilities. Hence this reply.
Go Brin
(T.J. O'Brien)
2 December 1968
No.
Stewart
2/12
#
RECERA ARCHIVES No. 81 - 3 JAN 1969
HKK 6/548/16
Mithram to ti
Ran
R+PA
SECRET
548/6
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