TNAG-0369-FCO40-415-Visit-of-Edward-Heath--UK-Prime-Minister--to-Hong-Kong--12-1-1974 — Page 43

commercial banks had already diversified, various

modifications had to be agreed. The UK went a long way

to meet Hong Kong's wishes.

5.

the

Last summer there were hard words in the Hong Kong

press to the effect that Hong Kong was being forced to

hold a disproportionate amount of sterling

implication being that Hong Kong was making sacrifices

for the benefit of the UK. This allegation was never

true. Hong Kong, as far as sterling guarantees are

concerned, has been treated on a par with other holders.

In fact, taking account of the high interest on sterling

and guarantee payments, Hong Kong has done better to be in

sterling than if they had converted into US dollars in

1968. Now that the commercial banks have departed from

the guarantee arrangements, these criticisms have died

down. The sterling arrangement is not at present a source

of friction between the UK and Hong Kong •

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