CONFIDENTIAL
2
the pound after the Smithsonian Agreement in December 1971, sug- gesting that this figure should replace the $2.40 "trigger" in
the Agreements. We have resisted such claims on the ground that
the Agreements were intended only to ensure that official sterling
holders were not worse off as a result of holding sterling than
they would have been if they had held the alternative available
reserve asset, US dollars.
4. Attached for information only is a copy of a telegram from
the Governor setting out the terms of a Question about Hong Kong
Sterling Agreement to the colony's Financial Secretary, and of
his reply of 3 August.
While some
5. Following the floating of the pound consultations were under-
taken with the Sterling Agreement countries about implementations
of the Agreements under floating and about possible extension
beyond September 1973; these have now been completed.
governments, including Hong Kong, were anxious to conclude a new
Agreement, others particularly Australia were not. The Chance-
llor has accordingly recently written to his fellow Ministers
suggesting that, on the balance of views, we should leave things as
they are until the beginning of next year when the situation is
expected to be somewhat clearer. A copy of his message is attached.
On implementation, the message says that as the contingency had
not arisen it would perhaps be sufficient for the time being to
leave present arrangements as they are on the understanding that
there would be rapid joint consultation should the need arise.
Deliberately, nothing is said about compensation.
CONFIDENTIAL
16.
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