TNAG-0382-FCO40-428-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 168

DRAFT REPLY TO HONG KONG TELEGRAM 1317. STERLING GUARANTEE

w/220

As far as the valuation of securities is concerned, it is our intention to accept your conventional method of valuation which follows Colonial Regulation 230 as equivalent to the statutory

valuation referred to in the Declaration. The revised MSP of 80% was calculated on this basis. The problem described in your paragraphs 2 and 3 does not therefore arise.

2.

As far as the point in your paragraph 4 is concerned, we accept that there may be occasions when participants in the scheme failed to maintain their minimum sterling holding on a particular reporting date because of a sudden fall in the market price of gilt edged securities. We have told others who have raised the point that a failure to meet MSH in such circumstances will be regarded as an accidental breach provided that the MSH

is restored by the next reporting date.

3. On publicity, we had already started enquiries into the mischev ous piece in the Guardian. As far as your own presentation

is concerned, we have no objection to your making the points in your paragraph 6 if you think that they will make your task easier.

4.

As regards the figures requested in your paragraph 9........

5.

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