SECRET
Sir D Watson
PS Mr Royle
HONG KONG'S FINANCIAL PROBLEMS
Nor submitted tee
the Hollands
behind
redraft the latter's muinté 1914
فلتسه
P.A
1. On 16 July Mr Royle discussed the situation in Hong Kong
with Mr Marshall, Mr Holland, Miss Pestell and myself.
2. We agreed that a number of difficult proble ems were pending
for Hong Kong. The present Sterling Agreement ends in September.
It is not known what will follow it, although it is becoming
nothing increasingly unlikely that we will offer Hong Kong anything in
replacement. Whatever is offered, it is important that we
should have as full and as meaningful discussions with Hong
Kong in advance as possible.
3. The ending or modification of the Sterling Agreement will
give a new importance to the solution of a number of problems
of financial management which have been pending in Hong Kong
for years.
These include the management of the banks and
financial institutions generally as well as the control of the
reserves and the winding up of the Hong Kong Government's own
guarantee.
4. We agreed that Hong Kong is very short of people both to
plan and to carry out financial reforms. They are also
ous
suspicious of requirements which have not been a part of Hong
Wong's success story in the past, and, especially, when they
are pressed on the Hong Kong Government by HMG, whose financial
performance the Hong Kong establishment affect to despise.
SECRET
/5.