TOP SECRET
in force under Section 2 of the Emergency Laws
(Re-enactments and Repeals) Act 1964. Any payment from
a Hong Kong account would thereafter require the specific
consent of the Treasury. This would apply not only to
money already on Hong Kong accounts, but to any money
subsequently finding its way there. It would also apply to
Treasury Bills and securities in the U.K. standing in the
name of Hong Kong residents. Details of the balances and
of the relevant legal powers are in Annexes 1 and 2
respectively.
11. Arrangements would then have to be made to enable
certain types of payments to be made from the blocked
accounts (see paragraphs 6 to 8 of Annex II). The
criteria to determine permissible payments would have to
be worked out subsequent to blocking action in the light
of the circumstances of the time. Among the questions to
be considered would be:-
12.
(1) whether refugees holding claims in Hong Kong
dollars could be allowed on humanitarian grounds
to convert these wholly or partially into
sterling by releases from the blocked balances;
whether any such concession should be extended
to refugees other than citizens of the U.K. who
had returned to the U.K. (and would therefore be subject to U.K. exchange control);
(2)
(3) how far it was desirable to maintain the balances
at maximum possible level as possible bargaining counters against the physical assets which the Chinese would have taken over.
In due course it would almost certainly be desirable
to exclude Hong Kong from the Sterling Area and apply full
exchange control. But this can be done later in the light of the prevailing circumstances.
4
Subsequently and in the
TOP SECRET