TNAG-0335-FCO40-371-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 33

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rather than continuing to float with sterling.

8.

The US dollar value of Hong Kong's official sterling reserves

is guaranteed at a rate of US$ 2.40.

There is however a

which does not

further complication in the case of Hong Kong

apply to other Sterling Area countries - that, because there is no Central Bank, her Government guaranteed to local banks the

Hong Kong dollar value of the holdings they were required to keep in sterling. This will involve the Hong Kong Government in substantial additional losses.

9.

Discussions were held in Hong Kong in July on the possibility of concluding a new sterling agreement to carry forward, in a slightly modified form, the present arrangements beyond the expiry date of September 1973; and in September in London, when it was made clear to the Hong Kong authorities that it was not possible for HMG to offer any special assistance to Hong Kong. At present the Hong Kong authorities are considering their position in relation to their most immediate problem, that of their relationship with the commercial banks. As all OSA countries, including Hong Kong, are being informed, the Chancellor has

concluded in the light of first round discussions that there is a majority view in favour of deferring further consideration of this question until next year, nearer the time when decisions are

necessary.

HONG KONG'S RELATIONSHIP WITH THE EEC AND THE GATT

10. The inclusion of Hong Kong in the EEC Generalised Preference Scheme is an important concession to Hong Kong. Detailed discussions

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