TECHNICAL POINTS RAISED IN MR P C WOO'S LETTER
1.
General Losses Through Holding Sterling
Whilst it is true that holders of sterling have seen the
value of their holdings reduced in terms of most other
currencies since 1968, it must be remembered that had they held
US dollars, the only practicable alternative, they would have
sustained even greater losses. In addition holders of sterling
have benefited from the generally higher interest rates in
London than have been available elsewhere, and those who held
Sterling Agreements received some compensation in November 1972
under the terms of those Agreements. (The depreciation of sterling
has, of course
to pay higher prices for their imports.)
most affected the UK and its citizens who have had
2.
Lack of Consultation on post-September 1973 Arrangements
Given the developments in the international monetary situation
over the last few years, and the current uncertainties in a number
of fields, it has been very difficult to propose any long-term
arrangements for the future. Hence we have offered a 6 month
extension of the guarantees under the present Agreements, which
have by general consent provided a valuable element of stability
during their lifetime.
3. Review of the Agreements in 1971
Discussions took place with Hong Kong and other holders of
Sterling Agreements in the period before they were renewed in 1971
and the general consensus was that they should be extended for a
further 2 years without significant modifications.
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