15
Sir Duncan Watson
Mr Royle
CONFIDENTIAL
1. The possibility that the outcome of the Treasury's deliberations about renewal of the Sterling Agreements will be satisfactory, or moderately so, to Hong Kong, is now rather better.
If, when the Chancellor has taken his decision, this turns out to be the case, then we might have a better atmosphere for discussion of the longer term question of financial advice to Hong Kong. If this is the situation, I agree it would be best for Mr Royle in private conversation to take the matter a little further with the Governor when he is here in September. rather than to suggest substantive talks with officials. This accords with Mr Holland's suggestion in his paragraph 6.
2. As to the form which advice to the Governor should take, I must admit to being attracted by the idea of a mission from the IMF for the reasons given by Mr Holland. I do not know if we have any influence on the formation of such missions but if it could include somebody with Bank of England or Treasury experience this would be particularly helpful. Perhaps Sir D Rickett's help could be enlisted to achieve this. Failing an IMF Mission somebody of the kind Sir Murray MacLehose suggests (a Merchant Banker) might well fill the bill, but it might not be easy to get somebody with all the necessary experience of paper issue etc since some very technical issues seem to be involved. I had not myself read the Governor's telegram as meaning that such a person would have to fit into the Hong Kong machine and thus be subordinate to Mr Haddon-Cave, though if this were the situation I agree with Mr Holland that it would probably stultify our efforts to reform the Hong Kong system.
3.
Mr Stuart agrees.
24 August 1973
cc Mittelland
CONFIDENTIAL
Кивер
K M Wilford