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powers of the Fund. Apart from this, however,
relationships with the Treasury or the Bank of England
(or with other central banks with which the Exchange Fund
holds deposits and securities) would not need any
different basis.
16. It is possible that a formal change in sovereignty
might create difficulties for Hong Kong's continued
membership of the ADB. (The PRC is not a member of the
ADB but Taiwan is). If there is a change in or ambiguity
over responsibility for external relations, responsibility
for the financial guarantees in paragraph 11 above would
be affected.
17.
Provided that agreement could be reached with China
on full ultimate administrative control by HMG over the
territory there should be no change in the existing
pattern of relationships with HMG reducing the
possible adverse effects on confidence in Hong Kong as
international banking centre. Acceptance by HMG of less
than this would place the Government in an untenable position.
(ii) Hong Kong as a Special Administrative Region (SAR)
18. The features of Special Administrative Regions have
been only loosely defined, but provide that 'the rules and
regulations in force shall be stipulated by law according
This would appear to allow the
to specific conditions'.
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/PRC