TNAG-0448-FCO40-513-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1974 — Page 42

Dear Waike:

Walker,

26

ما

Ли. Јашо

BANK OF ENGLAND Threadneedle Street

London EC2R 8AH

25th June 1974.

Sterling Declaration 1973: Hong Kong

Implementation of Guarantee

In accordance with the procedure set out in my letter of

4th March, I enclose the statements for Hong Kong.

Hong Kong has submitted figures on the modified settlement basis without prejudice to the final outcome of the representations which have been made on the interpretation of the accidental breach provision.

As I mentioned in my letter of 2nd April, it has not been possible to verify the official sterling reserves reported under the modified settlement basis by comparison with advices from depositaries as this modified basis is not related to any specific date. This has led to a modified Statement B. It has been possible, however, to deduce that such reserves were held by depositaries in the UK on 29th March: the end-February figures (the "base" on which the modified end-March figures were compiled) are confirmed by London depositaries and the increase in "cash" as reported by those depositaries between 28th February and 29th March 1974 is in line with the total of additions to the February position given by Blye in his letter of úth May 1974 (see copy attached) and with the figures in the advices from Hong Kong for those dates; moreover we know that these "cash" changes were the only changes, as the nominal figures for securities in the end-February and modified end-March advices remain unchanged.

I should be glad to know whether we may notify the Hong Kong government of our agreement in accordance with the modified terms of the Declaration. As Hong Kong have already confirmed that the figures for total official reserves and sterling reserves for 29th March (both versions) are correct, I would suggest that it will be unnecessary to agree the amount due before we nay it. They may in any case fool unable to agree formally with the modified basis for settlement.

D.A.Walker, Esq.

Yours sincerely,

Se