TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 273

PRIORITY

GRS 180

EN CLAIR

FM BTC 2409402 HONG KONG

UNCLASSIFIED

26

ккк

OR WELL

TO PRIORITY FCO TEL 126 OF 24 SEPT. 1973

STERLING,

PA

161

24. Tx

UNEXPECTED RETURN OF HADDON-CAVE TODAY WITHOUT ATTENDING IN F

MEETING HAS PROMPTED PRESS SPECULATION THAT, DESPITE DENIALS REPORTED

IN MY BTC 123, SOME FORM OF UNDERSTANDING HAS BEEN REACHED OVER

HONG KONG RESERVES AND WILL BE ANNOUNCED SOON.

HADDON-CAVE, INTERVIEWED ON ARRIVAL, IS REPORTED AS SAYING THAT

HONG KONG CLEARLY HAS AN INTEREST IN STABILITY OF STERLING AND THAT

ANY SWIFT TRANSFER OF SIGNIFICANT PORTION OF RESERVES OUT OF STERLING

COULD HAVE DISTURBING EFFECTS ON WORLD MONEY MARKETS.

HE DENIED THAT THERE WAS ANY

DRAMATIC SIGNIFICANCE'* IN HIS

RETURN. HE WANTED TO BE NEARER THE FILES SO AS TO ASSESS MY

UNDERSTANDING OF THE BRITISH GOVERNMENTS ARRANGEMENTS TO CONTINUE

THE GUARANTEE'', THERE WAS NO QUESTION OF EITHER ACCEPTANCE OR

REJECTION OF THE BRITISH GOVERNMENT'S OFFER AT THIS STAGE: HIS

IMMEDIATE TASK WAS TO PREPARE A SUBMISSION TO THE GOVERNOR IN

COUNCIL BALANCING THE BENEFITS AND OBLIGATIONS AND INCLUDING THE

POSSIBILITY THAT WE MIGHT IMPOSE SOME OF THESE OBLIGATIONS ON

OURSELVES IN THE INTEREST OF GENERAL STABILITY''.

ASTON.

ORWELL DISTRIBUTION

FRD

HKI OD