TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 144

OUTWARD

Department

FRD

2

SECRET

Drafted by

TELEGRAM

Precedence

D I Lewty

(Block Capitals)

INMEDIATE

G 206

Tel, Extn.

DESKBY

FOR

COMMS, DEPT.

(Date)

USE

Despatched

POSTBY..

(Time) .........................................Z...

PREAMBLE

(Time of Origin)

Z (G.M.T.)

(Restrictive Prefix........... (Caveat]

(Security Class.)............................

Privacy Marking)

ORWELL

(Codeword)

(Deskby)

TO...

GOVERNOR HONG KONG

Tel. No.

of...

(precedence)

(post)

AND TO (precedence/post)

AND SAVING TO

REPEATED TO (for info)

SAVING TO (for info)

Distribution:-

Orwell FRD HKIOD

Copies to:-

...................Z...

Z

[TEXT] Personal for Govenor and Maddon - Cove.

YOUR TELEGRAMS 728 & 741.

STERLING AGREEMENTS.

The present disturbed situation in the foreign exchange

markets is having unpleasant consequences for all of us.

The maintenance of the MSP is however an essential part of

all Sterling Agreements, and the guarantee is dependent

upon it. A breach of MSP therefore has, legally, the

effect of terminating the guarantee. We regret, therefore,

that it is not possible for us to agree to the request in

your telegram 728.

2. We are, however, prepared in the special circumstances

not to regard the minor breach reported in your telegram

741 as a formal breach of the Agreement, on the understanding

that the proportion of sterling in your total reserves

/falls