TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 81

NOTHING TO BE WRITTEN IN THIS MARGIN

Registry No.

DEPARTMENT

* Date and time (G.M.T.) telegram should

reach addressec(s)....

SECURITY CLASSIFICATION

Top Secret

Secret

Confidential

Restricted

Unclassified

PRIORITY MARKINGS

(Date)

}

Despatched

Flash Immediate Priority Routine

PRIVACY MARKING

In Confidence

En Clair.

[

Code

Cypher

Draft Telegram to:-

HONG KONG

No.

(Date) 31.7.73

And to:-

[Security_classification]

any

Privacy marking ]

-if any

[Codeword-if any]

?

SECRET

CONFIDENTIAL

GOVERNOR

Addressed to... HONG KONG

telegram ................

(date)

31.7.73

And to

58E

Repeat to:-

Saving to:-

Distribution:-

Copies to:-

repeated for information to

Saving to.

Our telegram 726 and your 817.

2. As regards the future of the Sterling Agreements, you will now have seen the Chancellor's message in my telegram No.

It will be evident to you that you should not (repeat not) assume that no arrangements will be made in relation to official sterling

balances after 24 September.

3. In the meantime we are disturbed at your readiness to advise the commercial banks to diversify and at the extent of diversification of the Government's sterling holdings which you have in mind. We should have hoped for a more balanced consideration of the interests of Hong Kong, the United Kingdom, and the other signatories to the Sterling Agreements.

4.

We think that the Financial Secretary, so far from advising the commercial banks to diversify,

should seek to influence them in such a way as to avoid

their taking precipitate action, having regard to the Chancellor's message. A fortiori there should be no diversification of the Government's holdings.

5.

To this end, if, and only if, he is virtually certain that by so doing substantial forward sales of