+
}
6. In the course of discussion I asked the question (making it dear that I was doing so on an entirely personal basis) - You would Hong Kong react if we offered no guarantee at all after barch, but sought instead a "gentleman's agreement" about the way the Colony would behave in regard to her sterling holdings? Le Haddon-Cave immediately said that this was what Hong Kong would like. And he could not in any case understand why, looking at it from the U's om point of view, we were even contemplating we pasibility of reneved guarantees when our interest rates were
sa favourable.
7. In my conversation with the Governor (which was of a fairly discursive kind), Sir M Haclebose also said with hardly any promptinį Írom me that long Kông would prefer to have some sort of under- standing with us thich did not involve a guarantee or precise
, obligations regarding our 13P.
our MSP. Me Haddon-Cave assured me later that the Governor and he had taken this line quite independently of each other, since they had not proviously discussed it.
8. He Haddon-Cave and I spent some time discussing the form which a "gentleman's agreement" of this sort, with no guarantee, might take. I emphasised that the agreement would need to be specific about the total amount of sterling which it would be Hong Kong's objective to hold, and would need to relate to a specific period of not less than, say, 18 months (Mr Haddon-Cave suggested a provision for reviews after, say, 6 or 12 months). We should also need (for confidence reasons) to be able to announce publicly that ve had reached an agreement under which Hong Kong had undertaken. to act in such a way as not to disturb the position of sterling. Finally, Mr Haddon-Cave himself suggested that there would need to be consultation with G about any proposal to sell significant amounts of sterling over, say £5m.
He Haddon-Cavo said thất Hồng Kong would be content to have a "gentleman's agreement" with no guarantee, even if other sterling holders were given guarantees, unless the guarantees given to others vera outstandingly favourable. If we gave a quarantee to others of the type included in the unilateral
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