SUPPORT FOR CHINA

Wairarapa Times-Age, 10 March 1939, Page 5

SUPPORT FOR CHINA

CURRENCY STABILISATION GUARANTEE BY BRITISH GOVERNMENT. FACILITATING ACTION » BY BANKS. (British Official Wireless.) RUGBY, March 8. Announcing in the House of Commons today that the Government had agreed to give a £5,000,000 guarantee which would enable the Hong Kong and Shanghai Bank and the Chartered Bank to participate in a stabilisation fund for the support of the Chinese currency, the Chancellor of the Exchequer. Sir John Simon, said: “The stability of the Chinese dollar is a matter of great importance to Britain in view of our financial and economic relations with China. “China has achieved a considerable success in her efforts to maintain the convertibility of her currency for trade transactions, to limit its depreciation in exchange against sterling, and to keep the rate reasonably stable for many months. “China has informed the British Government that she intends to continue her existing monetary policy and that as part of that policy she desires to establish a stabilisation fund of £10,000.000 in addition to her other reserves. The Chinese Government has invited two of the Government banks to subscribe a total of £5,000,000 to the fund and two British banks, namely, the Hong Kong and Shanghai Bank and the Chartered Bank will subscribe a further £5,000,000 between them. “The British banks have agreed to subscribe these amounts subject to receiving an undertaking from the Treasury to reimburse them for any loss that might be incurred when the fund was wound up. The arrangement will be that the fund will operate for 12 months, but it could be continued for further periods of six months by agreement. If the necessity arises, however, the fund can be wound up at any earlier time.” The British Government, said Sir John, would welcome the establishment of this stabilisation fund, the successful working of which would be of material assistance to British trade and enterprise in China, and the Treasury had agreed,, subject to legislative approval, to give these banks the guarantee against loss from which they ask. The Bill was being prepared and Sir John Simon hoped to present it early next week.