Yes, Sir. The stability of the Chinese dollar is a matter of great importance to this country in view of our financial and economic relations with China. The Chinese Government have achieved considerable success in their efforts to maintain the convertibility of Chinese currency for trade transactions, to limit its depreciation in exchange against sterling and to keep the rate reasonably stable for many months. They have informed His Majesty's Government that they intend to continue their existing monetary policy and that, as part of that policy, they desire to establish a stabilisation fund of £10,000,000 in addition to their other reserves. They have invited the two Chinese Government banks to subscribe a total of £5,000,000 to the fund and the two British banks, namely, the Hong Kong and Shanghai Bank and the Chartered Bank, to subscribe the 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 is wound up. The arrangement would be that the fund would operate for 12 months, but it could be continued for further periods of six months by agreement; if the necessity arose, however, the fund could be wound up at any earlier time.

His Majesty's Government would welcome the setting up of this stabilisation fund, the successful working of which would be of material assistance to British trade and enterprise in China, and the Treasury have agreed, subject to legislative approval being obtained, to give to these British banks the guarantee against loss for which they ask.

A Bill is being prepared, and I hope to be able to present it early next week.