TNAG-0374-FCO40-420-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 175

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Background Note

HONG KONG AND THE STERLING AGREEMENTS

1.

Hong Kong's anxiety about what was to happen when the

Sterling Agreements expire on 24 September culminated, in the

absence of any firm indications from HMG about the future, in the

suggestion that the Governor and Financial Secretary should see the

Chancellor. In the latter's absence on leave, arrangements were made

for them to be received by the only available Treasury Minister,

Mr Nott, on 9 August. The Governor has minuted separately to the

Secretary of State reporting on this discussion, which in his view

was unsatisfactory.

They hold a large

At the moment

While Hong Kong has a special

2. Hong Kong's concern is fully understood.

proportion, 88.7%, of their reserves in sterling.

they hold about £661m in sterling.

preoccupation because its Minimum Sterling Proportion (MSP) is so

very much higher than that of other large sterling holders (none of

which hold over 65%), the uncertainty which so deeply concerns them

is common to all the 50 or 60 Sterling Agreement signatories.

the Chancellor has not yet formulated the proposals he will make to

signatories generally, there is at present no useful guidance which

can be given to any of them. There is as yet no sign that the

sterling holders are as deeply anxious as Hong Kong has shown herself

to be.

Since

3. When he received the Governor, Mr Nott could therefore only

repeat, with some slight elaboration of the situation, what was

already known to Hong Kong, that is that what was to happen when the

/Sterling

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