DU145178 400m 5/73 G.W.B.Ltd. Gp.863
NOTHING TO BE WRITTEN IN
ERIN MAROEN
CONFIDENTIAL
breach that could have reasonably been foreseen
or prudently provided against (But as you know
we accepted that you did take it that way in good
faith and are making arrangements for compensation
accordingly. What is now needed is for us both
to agree on the obligations under the new Declaration).
6.
As to foresight and to prudence in relation
to the working of the present guarantee, the maintenance
of a margin on the lines described in para 3 of
Frog D
-/35
your Tel No 467 of 27 April would obviously greatly
reduce the risk of future breaches.
This appears
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Бојв
to be the practice followed by most other participants.
Plainly, the adequacy of any particular margin
in this respect will vary inversely with the degree
of surveillance that it is found on other grounds
appropriate to exercise over the portfolio.
Whilst
the arrangements for such surveillance are of course
t
!
a matter for the governments concerned (paras 6 and 7
of your tel no 594) we should point out that other
large sterling holders no nearer London have not
told me that they have had any difficulty over this.
7. You question whether it is necessary that the
terms of the guarantee be so framed as to require
purchases of sterling in certain circumstances.
The answer is that the guarantee continues tonbe
specified for all participants in terms of MSHS
fixed in advance; provision is accordingly needed
for the maintenance of MSHS; and in administering
the arrangement, HMG could not justifiably permit
suspension of observance of this key provision by
one participant in isolation, Other guaranteee
/arrangements
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