TNAG-0381-FCO40-427-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 73

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The best outcome would of course be that there should be publicity, but if or when questions come up we suggest that the line to take is that discussions between HMG and the Hong Kong authorities have produced a result that is satisfactory to both sides, and that Hong Kong is participating in the arrangement and enjoys the

The response guarantee in respect of official sterling holdings.

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to questions about the position of the commercial banks might be that the previous Agreements with Hong Kong were entirely special

The exclusion of the in extending to commercial bank holdings. commercial banks in the new arrangement brings the position of Hong Kong into line with that of other holders and reflects the fact that commercial bank sterling holdings are no longer judged. to be sufficient to warrant their inclusion.

We understand that

although Hong Kong's former MSP of 89% was more or less public knowledge, the actual level of sterling holdings is not published

It could be and we suggest that it should not be disclosed now. indicated in response to questions that Hong Kong's participation is based on the reserve position at the expiry of the former Agreement but with adjustments made to take account of the non- participation of the banks in the new arrangements.

5. We would be grateful to have confirmation of Hong Kong' a intention to participate on the basis outlined above, and to know that you agree that the presentation outlined in paragraph 4 will meet the case and will impress the delicacy of the matter on those concerned. But please let us know of any other presentational

points that occur to you.