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They do recognise that circumstances could arise in which IMG might have no alternative but to help Hong Kong if only for a period of crisis. They can see better arguments for supporting the banking system rather than the property market. Their present thinking is that it might be useful for the Governor to see the Chancellor and/or the Governor of the Bank of England when he is in London in January.
5.
We obviously need to watch this carefully but for the moment I do not think we should recommend that the Secretary of State intervene. The point may come where it will be necessary for Sir Geoffrey lowe to remind the Chancellor that political circumstances could require a collective Cabinet decision which would override directly financial considerations. But in fact I see no sign that the Treasury are missing this point and we should watch to see how their deliberations work out.
I am sure that a meeting with the Governor in January would be helpful.
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RD Clift
12 December 1983
Hong Kong Department
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