TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 183

GR 750

IMMEDIATE

CONFIDENTIAL

RECEIVED IN REGISTRY No. 51

18 MAR 1974

CYPHER/CAT A

AND BY BAG

HKK 5/10

!

FM FCO 131885 Z

(MF 9/548/1)

CONFIDENTIAL

(2+)

PA 'seling'

Goodfellow

ORWELL

DESKBY 140139Z (HONG KONG)

74

TO IMMEDIATE BRUNEI TELNO 50 OF 13 MARCH/AND TO IMMEDIATE CERTAIN POSTS ROUTINE NUKU'ALOFA BELMOPAR 1 FC SAVING CERTAIN OTHER POSTS. MY TELNO 274 TO HONG KONG (NOT TO ALL) AND MIPT TO YOU (NOT TO ALL): STERLING GUARANTEES

1. FOLLOWING IS TEXT OF CHANCELLOR'S MESSAGE:

1. ONE OF MY IMMEDIATE CONCERNS SINCE COMING INTO OFFICE HAS BEEN THE QUESTION OF WHAT SHOULD BE DONE WHEN THE PRESENT STERLING GUARANTEE EXPIRES AT THE END OF THIS MONTH. FOLLOWING THE MESSAGE OF LAST NOVEMBER FROM MY PREDECESSOR, MANY COMMENTS AND SUGGESTIONS HAVE BEEN RECEIVED FROM PARTICIPANTS IN THE PRESENT ARRANGEMENT. THESE CONTRIBUTIONS HAVE BEEN MOST HELPFUL IN ENAILING ME TO FORM A VIEW ON THIS DIFFICULT ISSUE. IT IS NOW PLAINLY IN OUR COMMON INTEREST THAT WE SHOULD RE ABLE TO ANNOUNCE AS SOON AS POSSIBLE WHAT IS TO FOLLOW AFTER THE END OF MARCH, AND IT IS AGAINST THIS BACKGROUND THAT I AM SENDING THIS MESSAGE NOW.

2. 1 THINK THAT MANY WERE HOPEFUL LAST SEPTEMBER, AT THE BEGINNING OF THE PRESENT GUARANTEE, THAT NEW INTERNATIONAL ARRANGEMENTS WITH RESPECT TO RESERVE CURRENCY HOLDINGS MIGHT BE AGREED AND INTRODUCED AT A FAIRLY EARLY STAGE. THIS PROSPECT HAS RECEDED IN THE PRESENT RADICALLY CHANGED INTERNATIONAL FINANCIAL SITUATION. IT SEEMS TO ME: THAT IN THIS SITUATION IT REMAING AT PRESENT IN ALL OUR INTERESTS THAT THERE SHOULD BE SOME ARRANGEMENTS RELATING TO STEPLING PRESENTLY HELD IN OFFICIAL RESERVES.

/3. BUT

CONFIDENTIAL