SOUTH CHINA MORNING POST, HONG KONG.
FRIDAY, JUNE 7, 1968
Govt urged to issue White Paper on H.K.'s
external
reserves
The Reform Club yesterday urged Government to issue a White Paper on the present external currency and reserves position of Hongkong.
In a statement issued yesterday, the Reform Club said the White Paper should explain the detailed arrange- ments agreed in London for the purchase of Hongkong dollar British bonds.
It should also state the pro- posed official policy for using these facilities, and give a clear indication of the steps that would be taken in future to ensure sound backing for Hongkong's currency and cover for its ex- ternal commitments in the light of its actual trading pattern and financial requirements.
The statement said that the Reform Club did not accept even the assurance of the Governor that Hongkong had obtained the best bargain possible in the cir- cumstances.
"We realise that Hongkong's case was put forcefully, but we regret that the outcome is ap- parently a compromise wreathed in mystery," the statement said.
The Reform Club statement continued that the time has come for plain speaking on the Sterling Area's external posi- tion.
"Let us have the facts-they are probably not quite as bad as most imagine and a clear state-
ment of the situation, as it affects Hongkong, in the light of the new arrangements will enable the commercial world to make a proper assessment of the posi- tion instead of floundering blindly about, 'hedging' in and out of different currencies, probably doing unnecessary harm to both themselves and sterling," the statement said.
The Reform Club said clear answers were required to the following questions:
What do Hongkong's offi- cial external reserves total and in what proportion are they held by Government and the authorised banks?
Apart from the local note and coin issues, which coinci- dentally total about £150m, which other known commitments do the reserves cover and in what currencies are these obligations?
What "strings" were at- tached to the United Kingdom agreement, secret or otherwise? Under what circumstances can the dollar bonds be reconverted into sterling after any further devaluation of the latter, and to what extent can the proceeds be used to purchase hard cur- rencies needed to meet the Colony's obligations? Is there any guarantee that these hard currencies will be made avail- able?
What interest is payable or the British Government Hongkong dollar bonds? To what extent will the bonds be subscribed to by authorised banks and is the rate of interest such as will enable this to be done without any reduction in savings and deposit interest rates in Hongkong which are already below those obtainable in the United Kingdom and the United States.
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