TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 197

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DA Walker Esq HM Treasury

CONFIDENTIAL

Dear Dand,

STIRLING PILE

Foreign and Commonwealth Office

London S.W.1

7 March 1974

RECEIVED IN REGISTRY No. 51

-7 MAR 1974

HKK 5/10

HEW UNILATERAL GUARANTEE: HONG KONG

Please refer to Kingsley Jones' letter of 4 March to Ray Barber in the Bank.

! 2. We are not happy with the idea of deleting the provision under which sterling held locally in Hong Kong is cligible for guarantee. I realize that since the withdrawal of the Hong Kong commercial banks' sterling from the guarantee arrangements, the provision has not actually been used by the Hong Kong Government. Nevertheless it is something to which they are entitled under the present Declaration; and in view of their well-known touchiness, it might be unwise to deprive Luem of it without consultation. In our view the proper course

ould be to leave the provision in the new Declaration, but to vite to Hong Kong about it later on. We could say that we merely left it in because ve vere continuing the provisions of the existing Declaration, but that it seemed to us now to be a dead letter and if Hong Kong agreed might be dropped in the Interests of administrative tidying-up.

3. A further point is that we know that Haddon-Cave and Lutter in Abu Dhabi have been a touch with each other about the sterling guarantee arrangements. So even if laddon-Cave did not initially object to the removal of the locally-held sterling

rovision from the Declaration to Hong Kong in the belief that such a change was being made generally, he might take umbrage if he found out that the provision had been left in the Declaration made to others,

ec: SW Payton Esq CHIG

Bank of England

Your

ir Aust, Legal Advisers Ir Crowson, IIKIOD

ever

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S JG CAMBRIDGE Financial Relations Department

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CONFIDENTIAL

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