TNAG-0376-FCO40-422-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 12

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had already been allowed some diversification.

It might well be

that they were already holding about the same amount of sterling

as they would be even without an agreement.

This should decrease

Mr Stuart

their anxiety about the position after 25 September.

said he was not clear how far the banks were covered by the new

arrangements. Mr Holland said they were covered by HMG's

Declaration in the same way as before the definition of official

balances remained unchanged. Sir D Watson thought it would be

useful to have an early reaction from Hong Kong to the Declaration.

5. Sir M MacLehose said that if he saw Treasury officials he

would say that Hong Kong's main requirement would be to seek a

reduction in MSP. Mr Royle asked Sir M MacLehose if, after seeing

the Treasury, he would do him a note on the situation setting out

what he would like the FCO to do. We would assist with the

Treasury if we could but we could not hold out great hopes.

Mr Holland said it was important not to try to rush the Treasury.

it was also important to avoid publicity. If the possibility of

special arrangements for Hong Kong was made public, other sterling

holders might well seek them too. Mr Marshall saw two separate

exercises: Mr Haddon-Cave should talk to the Chancellor in Nairobi

and Dar-es-Salaam about the longer term implications.

Meanwhile,

if any essential action had to be taken before 24 September, that

could be pursued now. We should ask Hong Kong to look at the

Declaration in the light of the latter point.

6.

Sir M MacLehose asked whether the Declaration had to be

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/accepted