TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 202

FLASH

CYPHER/CAT A

.SECRET

Append.ex. A.

(34

AFC 0.02133CZ

SECRET

TO FLASH GOVERNOR HONG KONG TELNO 543 OF 2 JULY.

FLOATING OF STERLING

HY TELNO 514 OF 23 JUNE, AND YOUR TELNO 593.

I HOPE THAT THE FOLLOWING MESSAGE OF TODAY'S DATE FROM THE CHAICELLOR OF THE EXCHEQUER TO STERLING AREA COUNTRIES WILL HELP TO ANSWER SOME OF THE POINTS RAISED IN YOUR TELEGRAM UNDER REFERENCE.

REGINS:

I SAID IN MY MESSAGE OF 23RD JUNE THAT THE MEASURES WE HAD THEN MAKER CALLED FOR CONSULTATION ABOUT THE STERLING AGREEMENTS. I HAVE BEEN GIVING FURTHER CONSIDERATION TO THIS MATTER AND THIS MESSAGE SETS OUT MY IDEAS ABOUT THE POINTS TO BE COVERED AND SOME OF THE HODIFICATIONS WHICH MIGHT APPROPRIATELY BE MADE IN THE STRUCTURE OF THE AGREEMENTS.

THE FIRST POINT IS A TECHNICAL ONE, BUT ONE WHICH IT WOULD BE SAISTELE TO RESOLVE FOR THE AVOIDANCE OF DOUBT. AS THEY STAND AT PRESENT, THE AGREEMENTS PROVIDE FOR A FORM OF IMPLEMENTATION WHICH COULD RAISE SOME PROBLEMS WHILE STERLING IS FLOATING. I AM SURE THAT THESE PROBLEMS CAN BE RESOLVED WITHIN THE SPIRIT OF THE AGREEMENTS, PUT I THINK THAT WE SHOULD HAVE THIS MATTER DISCUSSED AMONG OUR

TEGMICAL EXPERTS.

3. AS WE HAVE TO REVIEW THE AGREEMENTS, IT SEEMS TO ME THAT IN DOING SO WE SHOULD TAKE ACCOUNT NOT ONLY OF DEVELOPMENTS IN THE LAST FORTNIGHT, BUT ALSO OF FUTURE PROSPECTS AND REQUIREMENTS.

.

BEFORE RECENT DEVELOPMENTS, I HAD BEGUN TO GIVE THOUGHT TO STERLING AREA ARRANGEMENTS AFTER SEPTEMBER 1973, WHEN THE PRESENT ASPERSENTS ALL EXPIRE. I AM SURE YOU WILL AGREE THAT RECENT EVENTS WYS WIDERLINED THE IMPORTANCE OF MOVING AS FAST AS WE CAN TOWARDS A TORDAMENTAL REFORM OF THE INTERNATIONAL MONETARY SYSTEM. THERE IS A LARGE. COM ENSUS OF TITERNATIONAL OPINION ON THIS, NEVERTHELESS, IT 13 BOUND TO TAKE A CONSIDERABLE TIME TO SOLVE THE MANY DIFFICULT QUESTIONS WHICH STILL REMAIN AND TO GET NEW ARRANGEMENTS ACTUALLY CORK196. 17 SEEKS TO HE THAT IT WOULD BE TO THE ADVANTAGE OF EVERY