TNAG-0335-FCO40-371-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 106

STERLING

CONFIDENTIAL

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to 41L?

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Cook place

Following floating of the pound consultations were undertaken

with the Sterling Agreement countries about implementation of

the Agreements under floating and about possible extension

beyond September 1973; these have now been completed. While

some governments, including Hong Kong, were anxious to conclude

a new Agreement, others were not. Accordingly, the Chancellor

Rad

recently

written

will shortly be writing to his fellow Finance Ministers suggesting

nisters/suggesting

that, on the balance of views, we should leave things as they are

until next year when the situation is expected to be somewhat

clearer

(ii)

On implementation the message will say that as the

contingency has not arisen it would perhaps be

sufficient for the time being to leave present arrange-

ments as they are on the understanding that there would

be rapid joint consultation should the need arise.

(The rate has to drop below $2.376 (ie 1% below the

$2.40 guarantee level) for 30 consecutive days for

the guarantee to operate, and there will thus be time

for such consultations.)

Deliberately, nothing said about compensation,

which a number of Sterling Agreement holders have

asked for on the basis of losses since sterling was

allowed to float downwards from the December 1971

level of $2.60. If this is raised the Secretary of

State might say that the agreement was to guarantee

sterling at its then parity of $2.40 and that the

/guarantee

1. CONFIDENTIAL