TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 124

SECRET

When we sounded other Governments last year about

arrangements in the wake of the decision to float sterling,

there was a general consensus that the discussions should

best be postponed until after we had refixed. (This

consensus is reflected in the message which the Chancellor

sent to his colleagues in October 1972). If we seek to

discuss with them now the content of new agreements, we

might find ourselves not only up against real technical and tactical problems. We might also be arousing suspicioas

on the part of our partners as to why we thought we coule dispense with agreements between the expiry of the present

Agreements and the entry into force - on a date about which

we could not be precise of new ones. It seems to me at

least possible that our partners will not wish to engage

in serious negotiation on the content of an Agreement

to come into force at an uncertain time and in uncertain

circumstances. We, for our part, will have disclosed the

content of the Agreement we wish to negotiate; and, depond!

on whether that content seems attractive or otherwise to

our partners, they may well make their reserve dispositions

accordingly.

4.

I wonder therefore whether it is necessary to accept

either of the options which the Chancellor lists. Could

we not reasonably say to our sterling partners that the

monetary uncertainties are so great that it is not possible

for us to put firm proposals to them at this stage about

arrangements after the expiry of the Agreements?