PS/PUS
cc: Mr Donald
SECRET
HKK09014
RECEIVED
REGISTRY NO. ST
· 6 JUN 1983
DESK OF
INDEX
ins
An
File
4
DISCUSSION WITH THE BANK OF ENGLAND ON HONG KONG
1.
You told me that Lord Richardson had asked the PUS if there could be a discussion between Bank of England and FCO senior officials about Hong Kong.
2.
The background is presumably general Bank of England concern about the effect of the question of the future on economic confidence in Hong Kong, the recent fall in the Hong Kong dollar and worries as to whether the British Government might be called on to help.
3.
These problems are related to our own extremely sensitive contingency planning on Hong Kong. The Governor of Hong Kong (with whom I discussed this subject last week) is concerned that no hint of work of this sort should get out, because of the risks to confidence in the territory. Only he and the Financial Secretary are involved at the Hong Kong end. On the substance of the problem they do not envisage using Hong Kong reserves in order to support the Hong Kong dollar in more than a tactical way in the face of a major political crisis, nor would they ask the British Government to help in this way. The reserves would be kept essentially for emergency purchase of essential imports, in the face of hostile Chinese action.
4.
The Governor has stressed the need to avoid any extensive Whitehall exercise of this subject. He has also asked that the numbers of people involved in the FCO should be strictly limited. So far only Mr Donald and myself have been involved in correspondence and conversation with the Governor and Financial Secretary.
5.
I think we should support Hong Kong in treating this question with the tightest possible. confidentiality. Nevertheless, there would be value in explaining the position to Bank of England officials. The PUS may wish to speak to Lord Richardson and suggest that Mr Loehnis and possibly Mr Kirby, who deals with the Far East, should get in touch with Mr Donald and myself.
31 May 1983
Blip
R D Clift
Hong Kong and General Department
SECRET