TNAG-0375-FCO40-421-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 13

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behind us. She would therefore be grateful if the Governor

could provide details. For the remaining bank sterling she

could see that the Hong Kong Government might not wish to

offer the banks the old guarantee but the banks might never-

of theless think it worth their while taking advantage, a guarantee

exactly in line with the UK's offer. She would like to discuss

this with Mr Haddon-Cave. For the future, Mrs Hedley-Miller

stressed that we were not trying to impose the proposed

arrangement for a long time. We were obliged because of

the uncertainties of the external situation to keep open

the question of arrangements to follow after the six-month

period. But the Treasury would like to consider ideas for

a new arrangement which might last, say 2 or 3 years, pending

the consideration of possible substitution arrangements in

of a

the context for reformed international monetary system.

6. Sir Murray MacLehose commented that the inclusion or

exclusion of the banks bore upon the question of Hong Kong's

MSP.

If the banks were excluded then, since their holdings

of official sterling were, by definition, 100% sterling, the

Hong Kong Government would have to make up the MSP from its

own reserves alone. But there could be no question of their

buying sterling in order to maintain an unrealistically high

MSP.

7. Mrs Hedley-Millor acknowledged that this was where the arrangement might rub. They would have to discuss this with

Mr Haddon-Cave.'

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