(ii) the actual meaning, implementation and practical
value of the Arrangement at present,
(iii) the future of the Arrangement and of the Sterlin
Balances, including present thinking on the implications
4.
for the Sterling Area of UK entry into the EEC.
The present position is that Hong Kong enjoys
a considerable degree of financial devolution and is
free to invest its reserves either in Hong Kong or
London. The Hong Kong Exchange Fund Cdinance
provides for the establishment of a fund to be used
for the purpose of regulating the exchange value of the
stipulates that the Fund, or any part of t
currency
which
may be invested in securities approved by the Secretary
of State. There are no adinistrative directions which
require the keeping of the reserves, if placed in the UK, in the hands of the Crown Agents, The Hong Kong
Government
1 Cma
has complete freedom to spend the
reserves should the need arise,
NOTHING TO BE WRITTEN IN THIS MARGIN