CONFIDENTIAL
THE HNOURABLE FINANCIAL SECRETARY RECENTLY RETURNED FROM LONDON WITHOUT ANY INFORMATION AS TO HOW THE UNITED KINGDOM GOVERNMENT INTENDS TO PROTECT THE VALUE OF HONG KONG'S STERLING RESERVES, EXCEPT THAT WE SHOULD BE PATIENT AND WAIT UNTIL SOME TIME IN SEPTEMBER FOR MORE DEFINITE INFORMATION.
THIS IS REGRETTABLY AN UNSATISFACTORY STATE OF AFFAIRS, IN VIEW OF THE FACT THAT ABOUT 99 PER CENT OF HONG KONG'S RESERVES ARE IN STERLING, AS COMPARED TO ABOUT 40 PER CENT FOR SINGAPORE AND MALAYSIA.
THE QUESTION CAN BE FAIRLY ASKED WHETHER THE UNITED KINGDOM GOVERNMENT IS SIMPLY TAKING ADVANTAGE OF HONG KONG MERELY BECAUSE WE ARE A CROWN COLONY AND ARE THEREFORE MORE VULNERABLE AS REGARDS CONTROL OF OUR OWN FINANCIAL RESERVES.
THE CIVIC ASSOCIATION IS NOT AVERSE TO PART OF HONG KONG'S RESERVES CONTINUING TO BE HELD IN STERLING, BUT ANY FUTURE AGREEMENT HAS TO BE MORE FLEXIBLE, FAIRER AND LINKED TO A MORE REASONABLE GUARANTEE IN FAVOUR OF HONG KONG'S POSITION.
FIRSTLY, WE SHOULD BE GIVEN THE RIGHT TO DIVERSIFY OUR RESERVES INTO OTHER HARD CURRENCIES, SHOULD WE SEE FIT TO DO SO,
BY UP TO ANOTHER 40 PER CENT WITHIN A REASONABLE PERIOD OF TIME ACCEPTABLE TO HONG KONG.
SECONDLY, HONG KONG OUGHT TO BE GIVENN A BETTER GUARANTEE WHICH WILL NOT INCUR A LOSS IN TERMS OF HONG KONG DOLLARS IN CASE OF ANY FUTURE DEVALUATION OR ADVERSE FLUCTUATIONS IN THE RATE OF STERLING.
THIRDLY, AN ASSURANCE MUST BE GIVEN BY THE UNITED KINGDOM GOVERNMENT THAT THERE WILL BE CLOSER AND BETTER COMMUNICATION AND UNDERSTANDING IN THE FUTURE HANDLING OF HONG KONG'S STERLING RESERVES IN LONDON.
UNLESS THE ABOVE CONDITIONS ARE MET WHEN THE HONOURABLE FINANCIAL SECRETARY NEXT MEETS WITH LONDON OFFICIALS, RESPONSIBLE COMMUNITY GROUPS IN HONG KONG WILL HAVE NO OTHER ALTERNATIVE BUT TO CONCLUDE THAT THE BRITISH GOVERNMENT IS ARBITRARILY TAKING ADVANTAGE OF AND IMPOSING ITS WILL UNFAIRLY UPON HONG KONG PEOPLE.
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