TNAG-0382-FCO40-428-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 56

CONFIDENTIAL

FOLLOWING THE OFFER BY HMG TO GUARANTEE CERTAIN OFFICIAL STERLING BALANCES IN THE SIX MONTH PERIOD FROM 24 SEPTEMBER, THERE HAVE BEEN DISCUSSIONS WITH THE HONG KONG AUTHORITIES ON THE APPLICATION OF THIS OFFER TO HONG KONG. THESE DISCUSSIONS CENTRED PRINCIPALLY ON THE OFFICIAL BALANCES HELD WITH THE HONG KONG COMMERCIAL BANKS, WHICH IT IS NO LONGER APPROPRIATE TO COVER UNDER THESE ARRANGEMENTS. CONCLUSIONS SATISFACTORY TO BOTH SIDES HAVE BEEN REACHED. UNQUOTE" 4. THIS DRAFT ANSWER WILL BE SUBMITTED TO MINISTERS HERE TOMORROW MORNING AND WE WOULD APPRECIATE ANY COMMENTS NOT LATER THAN 10.00 AM.

DOUGLAS HOME

FILES

HKIOD

FRD

PS/MR ROYLE

PARLIAMENTARY UNIT

MR MARSHALL

MR HOLLAND

COPIES TO:

MR D A WALKER

MR FR BARRATT

- TREASURY

HONG KONG GOVERNMENT OFFICE

6 GRAFTON STREET W 1

2

CONFIDENTIAL