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NO NEED FOR SUBSTANTIVE CHANGE IN BANKING LEGISLATION OR THE POWERS AND RESPONSIBILITIES OF THE HONG KONG GOVERNMENT IN FINANCIAL MATTERS.
15. HOWEVER, THERE COULD BE A POLITICAL NEED TO CHANGE THE EMBLEMS ON THE CURRENCY BUT THIS WOULD BE A PRACTICAL PROBLEM (AND RELATING TO NEW ISSUES ONLY) OF NO MAJOR SIGNIFICANCE. THE TREASURY'S (AND THE SECRETARY OF STATE'S) RESPONSIBILITIES IN RELATION TO THE COINAGE MIGHT BE JUDGED A POLITICAL ANACHRONISM AND SO REQUIRE REPEAL. APART FROM THIS, HOWEVER, RELATIONSHIPS WITH THE TREASURY OR THE BANK OF ENGLAND GENERALLY 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 ADS. (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 ADMINISTRATIVE CONTROL BY HMG OVER THE TERRITORY THERE SHOULD BE NO CHANGE IN THE EXISTING PATTERN OF FINANCIAL AND ADMINISTRATIVE RELATIONSHIPS WITH HMG AND CONFIDENCE IN HONG KONG AS AN INTERNATIONAL BANKING CENTRE NEED NOT BE AFFECTED. ACCEPTANCE BY HMG OF LESS THAN THIS WOULD PLACE THE GOVERNMENT IN AN UNTENABLE POSITION.
(11) HONG KONG AS A SPECIAL ADMINISTRATIVE REGION OF CHINA: 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 TO SPECIFIC CONDITIONS ** THIS WOULD APPEAR TO ALLOW THE PRC TO STIPULATE, AS ONE EXTREME, THAT THOSE RULES AND REGULATIONS SHOULD BE THE ENACTMENTS AND REGULATIONS OF THE HONG KONG GOVERNMENT PRIOR TO THE ACKNOWLEDGEMENT OF CHINESE SOVEREIGNTY - INCLUDING THE RETENTION OF AN INDEPENDENT CURRENCY AND BANKING SYSTEM.
19. SUCH AN ARRANGEMENT WOULD APPEAR LITTLE DIFFERENT, FOR PRACTICAL PURPOSES, FROM THE SIMPLE RECOGNITION SCENARIO AT (1) THOUGH, PSYCHOLOGICALLY, THE APPEARANCE OF A CLOSER AND MORE FORMAL RELATIONSHIP WITH PEKING MIGHT WORRY BANKERS MORE. IF, HOWEVER, HONG KONG WERE NOT TO RETAIN ITS SEPARATE EXCHANGE RATE REGIME (AND PARTICULARLY FREE MOVEMENT OF CAPITAL) A SIGNIFICANT PART OF THE BASIS FOR THE ESTABLISHMENT OF A BANKING CENTRE IN THE TERRITORY WOULD DISAPPEAR.
20. A MOVE TO SAR STATUS WOULD MAKE IT LESS LIKELY THAT HONG KONG COULD REMAIN A MEMBER OF THE ADE. AT THE VERY LEAST, SINCE HMG WOULD NOT PRESUMABLY HAVE ANY RESPONSIBILITY FOR THE TERRITORY'S EXTERNAL RELATIONS, RESPONSIBILITY FOR GUARANTEEING FUTURE LOANS AND/OR CAPITAL OBLIGATIONS WOULD FALL TO THE PRC. IF HONG KONG WERE TO CONTINUE, AS AN SAR, WITH A SEPARATE CURRENCY AND EXCHANGE RATE, THIS MIGHT RAISE PROBLEMS FOR CHINA IN RELATION TO THE IMF THOUGH, IN SUCH SPECIAL CIRCUMSTANCES, THE ARRANGEMENT MIGHT BE COUNTENANCED.
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16.