TNAG-0382-FCO40-428-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 55

GPS 300 IMMEDIATE

CYPHER/CAT A

FM FCO 181855Z

CONFIDENTIAL

CONFIDENTIAL

(HK)

RECEIVED IN REGISTRY No. 61

TOP COPY

28 DEC 1973

DESKBY 193130Z

HKK 5/1

TO IMMEDIATE GOVERNOR HONG KONG TELNO 1302 OF 18 DECEMBER 1973.

STERLING GUARANTEES

257

256

1. A NUMBER OF PARLIAMENTARY QUESTIONS HAVE BEEN PUT DOWN BY MR BRUCE-GARDYNE FOR WRITTEN ANSWER BY THE CHANCELLOR OF THE EXCHEQUER TOMORROW, 19 DECEMBER. ON A SEPARATE BUT RELATED QUESTION BY MR BRUCE-GARDYNE TO ME, SEE M IF T.

2. THE QUESTIONS TO THE CHANCELLOR ARE :

QUOTE WHAT WAS THE PROPORTION OF HONG KONG COLONY'S CURRENCY RESERVES HELD IN STERLING AT THE END OF 1966, 1967, 1968, 1971, AND

THE LATEST DATE FOR WHICH FIGURES ARE AVAILABLE: UNQUOTE

QUOTE WHAT IS THE AGGREGATE VALUE OF STERLING CURRENCY HOLDINGS IN

HONG KONG COVERED BY THE DOLLAR EXCHANGE RATE GUARANTEE: UN UOTE

WHAT WERE THE UNDERTAKINGS ENTERED INTO BY THE COLONIAL AUTHORITIES

IN HONG KONG IN RETURN FOR THE PROVISION OF EXCHANGE RATE GUARANTEES FOR CURRENCY HELD IN STERLING UNDER THE BASLE AGREEMENTS:

AND WHETHER THESE UNDERTAKINGS HAVE BEEN OBSERVED.

WHAT DISCUSSIONS HE HAS HAD WITH THE COLONIAL AUTHORITIES IN HONG

KONG REGARDING THE ELIGIBILITY OF THE COLONY'S RESERVES FOR EXCHANGE RATE GUARANTEE UNDER THE CURRENT ARRANGEMENTS EXPIRING IN MARCH:

AND WITH WHAT RESULT.

3. WE PROPOSE TO ANSWER BRIEFLY IN THE FOLLOWING TERMS, SUBJECT TO

ANY COMMENTS YOU MAY HAVE:

QUOTE WITH PERMISSION, I WILL TAKE THESE QUESTIONS TOGETHER.

THE TEXT OF THE 1968 STERLING AGREEMENT WITH HONG KONG IS SET OUT

IN CMND 3835 OF NOVEMBER 1968. DETAILS OF THEIR OFFICIAL RESERVE

HOLDINGS ARE TREATED AS CONFIDENTIAL BY THE HONG KONG AUTHORITIES.

NOR IN ANY CASE WOULD IT BE APPROPRIATE FOR ME TO COMMENT ON THE

DETAILS OF CONFIDENTIAL ARRANGEMENTS WITH INDIVIDUAL OFFICIAL STER-

LING HOLDERS.

/FOLLOWING THE

-CONFIDENTIAL