TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 253

3.

24 September sterling figures) and to the extent that they diversify on that date sone 50 million they receive from Government in compensation

under the internal guarantee arrangement.

Haddon-Cave estimates forward sales at £100 million

and believes that the banks would continue to hold the remainder (£195). At the same date they had

sterling liabilities of £124 million and an over- bought position of about £70 million seems feasible.

He also considers that the banks will sell for

dollars the £50 million of compensation they receive.

The effect on the above figures would be:

1

First alternative position at 24 Bentenber

£ millions

Government

Banks

Total official sterling

Total external reserves

Sterling

Other

#

Currencica

85

330

195

། ིི༅།g

86%

The extreme position for Hong-Kong would be if the bunks diversified all their sterling and held only US dollars (now the intervention currency) in their

This would have the foreign currency assets. advantage for the Hong-Kong Government of letting

them out of local guarantee obligations.

So far as

the UK is concerned we would have to tolerate a

further diversification of £195 million, but having