FO371-24687 — Page 162

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Decode.

Sir R. Craigie.

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10.35 p.m.

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7.35 p.m.

No. 2489. (R).

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F 5656

92

20 Dee 1940

DEPARTMENTAL NO.2.

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(Tokyo).

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18th December, 1940.

18th December, 1940.

18th December, 1940.

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电

My telegram No. 169 Saving repeated to Shanghai

I have received reply from Minister for Foreign Affairs regarding establishment of new Central Bank in China, which was included in my comprehensive representations regarding outstanding cases in China. Following is the summary of the main points. (Begins)

My communication should have been addressed direct to Nanking Government. Latter desires a stable currency in China. Issue of new bank-notes is the only alternative to support of Fapi which would entail increasing the Chungking power of resistance. Nanking Government are making all preparations to ensure that new Bank is sound. There is no necessary connexion between Bank's establishment and enforcement of trade and exchange control, but Nanking Government are perfectly free to enforce latter, which is now generally adopted by other countries. Introduction of such control in North China was largely due to the fact that third Power interests did not co-operate with use of Federal Reserve bank-notes. Japane se Government propose to give all possible assistance to the new Bank. Similar co-operation by third Powers would contribute greatly to stability of currency and an economic recovery of Central China. (Ends).

I assume you will wish me to reply as soon as possible to this and I should be grateful for instructions. Repeated to Shanghai No. 942 for Chungking No.164,Hong Kong No.422, Washington No.330.

[Copies sent to Mr. Waley.]

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08

NEC

$40

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