TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 112

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(c) that, should gilt edged prices fall

during the guarantee period, depreciation

in current values would not be made up by

further purchases of sterling.

2. In amplification of paragraph 1(a)

above, I should point out that the restoration

of our M.S.P. would require us:

either to buy sterling assets worth

«1257 million or £317 million against

Hong Kong dollars (depending on

whether the banks' residual sterling

positions are included or not) ;

or to switch non-sterling assets worth

120 million or E34 million out of

a total of £82 million (again

depending on whether the banks'

residual sterling positions are

included ornet).

The first course is quite impractical and the

second would be imprudent and could not be

defended politically.

3. I should be glad of the Treasury's early

reactions for I am anxious to see this question

settled one way or another, as soon as possible.