TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 17

SECRET

What to say to the Governor

The Governor clearly feels that the difficulties of his position are not properly understood in London. He should certainly be given an opportunity to let off steam.

With the agreement of the FCO, we recommend that he should be told personally in confidence about the idea for a unilateral declaration by HMG, but it must be stressed that this is the view of officials only and that no declaration may in fact be made. To bring the Governor into our confidence might help to lessen his evident annoyance, although, since we must insist on confidentiality, it will not help him except insofar as he is able to give general guidance to his Financial Secretary.

it will also be important to impress on the Hong Kong Government, that whatever the banks do, the Government should not diversify from sterling at least until the present agreement expires. We cannot compel them but we can use moral suasion. The Governor is under pressure from the Legislative Council. He must be put indor corresponding pressure from HMG.

If the above line is accepted, a suggested speaking note is

attached.

1

!