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·HICK 10017
RECE
2 0 OCT 1983
DD 28010OZ HONG KONG
GRS 385
MISTRY
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DESKBY 280100Z
FM FCO 27170OZ SEP 83
TO IMMEDIATE HONG KONG
TELEGRAM NUMBER 979 OF 27 SEPTEMBER
STRICTLY PERSONAL FOR GOVERNOR FROM GIFFARD
See
IS
YOUR TELNO 11 TO OTTAWA: FUTURE OF HONG KONG: FINANCIAL
SITUATION
1. IN THE LIGHT OF RECENT DEVELOPMENTS, THE CHANCELLOR OF THE EXCHEQUER HAS ASKED THE TREASURY TO PREPARE NOTES FOR HIS RETURN ON THURSDAY ON POSSIBLE WAYS IN WHICH CONFIDENCE IN THE HONG KONG DOLLAR MIGHT BE RESTORED. ALL CONCERNED RECOGNISE THE DELICACY OF THE STUDY AND THE WORK IS BEING
TREATED ON A STRICT NEED TO KNOW BASIS.
2.
THE NOTES WILL COVER THE FOLLOWING POINTS:
(A) A BRIEF EXAMINATION OF THE CAUSES OF THE DECLINE IN THE HONG KONG DOLLAR, EMPHASISING THAT THEY ARE PRIMARILY
POLITICAL SEMI COLON
(B) A DISCUSSION OF POSSIBLE MEASURES WHICH ARE TH RESPONSIBILITY OF THE HONG KONG GOVERNMEN,, INCLUDING SOME ALREADY TAKEN, SUCH AS MOVEMENTS IN INTEREST RATES AND OTHERS UNDER CONSIDERATION SUCH AS THE POSSIBLE REMOVAL OF
Z
THE WITHHOLDING TAX ON INTEREST ON HONG KONG DOLLAR
DEPOSITS SEMI COLON
(C) EXCHANGE CONTROL REGULATIONS SEMI COLON THE NOTE IS LIKELY TO CONCLUDE SUBJECT TO YOUR COMMENTS THAT IN HONG KONC'S SPECIAL CIRCUMSTANCES ANY EFFECT ON THE EXCHANGE RATE WOULD BE OFFSET BY THE DAMAGE TO HONG KONG'S ATTRACTION AS A COMMERCIAL AND FINANCIAL CENTRE SEMI COLON (D) MEASURES FOR CONTROL OF THE MONEY SUPPLY SEMI COLON
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