TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 21

Dear Jones,

SECRET

BANK OF ENGLAND Threadneedle Street

London

EC2R 8AH

16th July 1974

دوج

roy

des P/A

1974 Declaration:

Hong Kong

I enclose a letter from the Accountant-General of 3rd June which because of a filing slip here has unfortunately not been dealt with.

The amended advice enclosed with that letter showed the reserve position relevant to the 1974 Declaration, i.e. excluding the backing (You will recall that for the note issuing banks' fiduciary issues.

this backing had been admitted as eligible for the September 1973 Declaration but was declared not eligible for the March 1974 Declaration.) Hong Kong have correctly indicated that their MSH under the current Declaration is based on the amended ena-March reserves which were lower than at 24 th September. It is therefore 70% of £386,014,000, i.e. £270,210,000 to the nearest thousand pounds.

On their second question the modified basis settlement gave a 10% deduction of £38,414,000; and paragraph 4(i)(a) of the current Declaration says that the amount to be deducted in a December settlement

Hong would not exceed the amount deducted under the 1973 Declaration. Kong appear to be right, therefore, in claiming £38,414,000 as the

If, however, the maximum deduction under the current Declaration.

the normal rules had applied to Hong Kong in the present settlement, deduction would have been 10% of the end-March figure of total reserves, i.e. £39,461,000.

I should be glad to know that we may give Hong Kong early confirmation on the two points. As you know, they have also asked when compensation will be paid.

Kingsley Jones, Esq.

Yours sincerely,

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