TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 116

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Because it was felt that early September was too late to be able to negotiate a new agreement in terms suitable for Hong Kong, the Governor and the Financial Secretary visited London in early August for talks with a Minister and senior officials of the Treasury. As Honourable Members were informed by the Financial Secretary on 14th August, these talks were not fruitful and Hong Kong was asked to be patient until the Chancellor's message of early September was received,

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The Chancellor's message arrived on 7th September after three days of heavy pressure on the pound, pressure which was ultimately stemmed by the announcement in London on 6th September that the British Government "had decided to continue for six months to guarantee certain official sterling reserves". The Financial Secretary had been

in London during the end of August/beginning of September - mainly for talks on the mass transit railway - and he had attempted again to obtain an indication of the British Government's intended proposals for a new sterling agreement. He was told nothing while he was there, but was handed a copy of the message at Bahrain while on his return journey.

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Meanwhile, the Governor was given an assurance, when he was in London prior to his return to Hong Kong on 16th September, that Treasury officials would have "comprehensive talks" with the Financial Secretary in Dar-es-Salaam during the Commonwealth Finance Ministers' Meeting on 19th - 20th September.

Points made at Commonwealth Finance Ministers' Meeting

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Opening a discussion on the Declaration, the Chancellor stressed that the further guarantee was in respect of balances at 24th September and not further balances accumulated after that date for 'our eventual aim is to reduce the reserve role of sterling". The Chancellor said he had given a great deal of thought to the period of the further guarantee as it was difficult to foresee the course of the discussions on international monetary reform. He thought it best, therefore, to select a period which would give all concerned "a temporary breathing space to take stock" and "I have an open mind how to proceed after March". But, he went on, "in due course I shall be in touch with you again". He gave no indication when this would be and, indeed, when questioned by other Ministers, refused to be drawn on the procedure envisaged and, in particular, on the possibility of proper negotiations.

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The delegates of Bahamas, Gambia, Ghana, Tanzania and Zambia complained about the lack of prior consultation and stressed that, if the agreements were to be further extended, there must be effective consultations beforehand. They also made, inter alia, the following points:

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