TNAG-0374-FCO40-420-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 176

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Sterling Agreements came to an end had been the subject of long

consideration by Officials and Ministers, but that in the difficult

international situation and a world so different from that of 1968,

it was not easy to see what would be in everybody's mutual interests.

One message had already been sent from the Chancellor to Sterling

Agreement signatories explaining his background thinking and asking

for their views. A second message, which would include more precise

suggestions for arrangements after 24 September, was promised for

early September when Ministers would have decided exactly what

proposals they wished to make

4. The Governor and Mr Haddon-Cave could not, of course, be told

of the various possibilities which might be put to Ministers for

decision - these include a unilateral declaration by the UK which

would, unlike a negotiated agreement, be simple and quick to put into

operation. Such a declaration would probably offer a dollar

guarantee to countries which continued to observe the minimum sterling

proportions. The attractiveness of a declaration of this sort to

sterling holders would depend largely on the rate which we chose as

the basis for the guarantee. No decisions have been taken; but

it is possible that Hong Kong will, in the event, find that its

worst fears have not been realised.

5.

The result of Hong Kong's discussions with Mr Nott and after-

wards with officials was that while they were clearly unsatisfied

not to learn anything precise about what was to happen after

24 September, they were prepared to use their best endeavours to

discourage the Hong Kong banks from selling sterling forward during

the remainder of the life of the Agreement (everyone accepted that

in the final analysis they could not dictate to the banks).

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