TNAG-0375-FCO40-421-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 12

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3. In reply Mrs Hedley-Miller confirmed that time for such

discussions would be found in Dar-es-Salaam. The Treasury

ed

expect and intended to make time for comprehensive talks with

Mr Haddon-Cave. When he was last in London it had not been

possible to discuss the proposals then in mind for a

unilateral guarantee since they had not been approved by

Ministers. The idea of the present declaration was essentially

to carry out a holding operation. This was an interim approach.

For a number of reasons HMG had had to make the offer unilat-

erally without negotiation. In these circumstances it was

difficult to think of modifications or negotiations on the offer.

4. Two questions needed to be considered: 1. the minimum

sterling proportion (MSP) and 2. the sterling holdings of the

Hong Kong banks. It was true that Hong Kong had a high MSF

but they were not the only overseas holders of sterling who

did not like the proportion fixed for them. It was not easy

to contemplate changes in the context of a unilateral temporary

offer. She did not mean to slam the door against all possi-

bility of modifications: but it should also be borne in mind

alertas or

that existing MSP's were to be retained for the interim period:

"the"

it was not as though HMG had ignored concern about MSP levels

in terms of a new long term arrangement.

5.

On the question of the Hong Kong banks' holdings of

sterling Mrs Hedley-Miller said it would be helpful if we

could know how much sterling the commercial banks were actually

holding. It might be that they had already shed a great deal

of sterling to the point where they would not wish to diversify

further. If so, the problem might to some extent already be

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