TNAG-0380-FCO40-426-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 59

Lack of Consultation with Hong Kong over:

4.

(a)

floating of sterling.

It is difficult to

and

(76)

imagine Mr Woo is seriously suggesting that

HMG could have consulted Hong Kong in advance;

"exclusion" of Hong Kong from the Overseas

Sterling Area.

It is not true to say that Hong Kong (or anybody else) was

"excluded" from the Overseas Sterling Area (OSA) in June 1972.

What happened was the imposition of exchange control on

financial transactions between the UK and the OSA (except the

Republic of Ireland). This was necessary to prevent possible

speculative outflows of capital following the floating of sterling

in June 1972. So far as we are aware, the imposition of exchange

control to the OSA has not given rise to any significant

difficulties.

CONFIDENTIAL

(3001) Dd.145244 400m 8/73 L.Ltd. Gp.839

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