TNAG-0380-FCO40-426-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 127

RECEIVED KN

REGISTRY No. 51

3 SEP 1973

SECRET

Mir Cambridge

STERLING AGREEMENTS:

HKK 5/1

1.

Reference MF 9/501/1 PA Vult

HEYED.

川区

122)

SMALLER DEPENDENT TERRITORIUS

I have drawn the attention of the Treasury to the implications of the eligible balances definition in the proposed Declaration for the smaller dependent territories. As you know, it is proposed that we should guarantee sterling held on 21 September 1973 or the last working day of March 1974, whichever is lower. If this provision is also applied to the dependent territories, it would mean that the Financial Secretar J

Would have to consider whether to keep

cny sterling the territory obtained in excess of what it held on 2 September in sterling, or whether the territory's interests would better be served by trying to hold it in some other currency. The small dependent territories are not equipped to make such calculations, and we do not want them to try.

2.

The answer is to make eligible balances for these smaller dependent territories the sterling they hold on the last working day of March 1974, even if it is more than they held on 24 september 19.3. The Treasury seem disposed to accept the political case for this, and I, therefore, attach a draft letter to Mrs Gilmore.

September 1973

Copied to:

Mr FR McGinley

GGD

WIAD

POTD

HKIOD

Mr Franklin

Economists Department

Mr Batstone

Legal Advisors

Secret

Or wertes

D I Lewty

Financial Relations Department

- .2 500M 4