TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 100

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sterling has depreciated from Smithsonian parities;

"Smithsonian parities" means the set of relationships between currencies which was established under the auspices of the International Monetary Fund following the agreement of 18 December 1971 on the realignment of exchange rates;

and

"the implementation rate" and "the guarantee rate" have the meanings ascribed to them in paragraph 2 of this

Declaration.

The Guarantee

2.

The Government of the United Kingdom of Great Britain and Northern Ireland hereby declare that they will, in accordance with and subject to the provisions of this Declaration, undertake to compensate in sterling for any reduction in the value of the eligible balances described in paragraph 4 of this Declaration, as measured by the extent, if any, to which the average effective depreciation of sterling in the period 1 April to 31 December 1974 ("the implementation rate") is greater than the average effective depreciation of sterling in the period 25 September 1973 to 31 March 1974 ("the guarantee rate"), which latter rate will be notified to the Government of Hong Kong as soon as possible after the end of March.

Minimum Sterling Holding

3. (1) The guarantee is given on condition that official sterling reserves are maintained throughout the period that the provisions of this Declaration are in effect at or above an amount equal to whichever is the lowest of the following amounts,

namely:

(a) 70 per cent of total official external reserves;

or

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