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TREASURY ARE ASKING FOR, PARTICULARLY WHEN THEY TALK OF QUOTE AGREEMENT UNQUOTE, BEYOND THE PROCEDURES WHICH ALREADY EXIST. THE SECRETARY OF STATE'S POWERS AND THE LIMITATIONS ON MINE IN RELATION OF THE EXCHANGE FUND, MONETARY AND OTHER MATTERS ARE ALREADY SET OUT IN THE ROYAL INSTRUCTIONS AND VARIOUS ORDINANCES. THERE ARE OTHER AREAS WHERE THE DECISION MUST LIE IN HONG KONG (AS THE CHANCELLOR HIMSELF STRESSED IN CONNEXION WITH OUR RECENT CURRENCY STABILISATION MEASURES). NOR CAN 1 IN ANY WAY ENTAIL MY POWERS AND RESPONSIBILITY TO HONG KONG AS GOVERNOR.
5. I THINK WE SHOULD LOSE MUCH VALUABLE ENERGY TO 10 GOOD PURPOSE IF WE TRIED TO RE-DEFINE THIS POSITION. NOR DO I SEE ANY NEED TO DO SO. WE HAVE ESTABLISHED A CONSULTATIVE RELATIONSHIP BETWEEN THE FCO, TREASURY, BANK OF ENGLAND AND OURSELVES WHICH WORKED VERY WELL IN CONNEXION WITH THE HANG LUNG BANK AND THE CURRENCY STABILISATION MEASURES. YOU MAY BE ASSURED THAT WE VALUE HIGHLY THE KIND OF CONSULTATION WHICH OCCURRED THEN AND WE FULLY RECOGNISE THE NEED FOR CONSULTATION ON SUCH MATTERS TO CONTINUE.
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6. FOR THE REST IT IS DIFFICULT TO COMMENT WITHOUT KNOWING
MORE SPECIFICALLY EXACTLY WHAT IT IS THE TREASURY HAVE IN MIND YOUR TELEGRAM SPEAKS OF QUOTE COMMITTING UK GOVERNMENT RESOURCES UNQUOTE, AND QUOTE LIMITING THE FORM AND EXTENT OF ANY SUPPORT WHICH MIGHT BE CONSIDERED UNQUOTE. OUR IMPRESSION FROM THE DISCUSSIONS WHICH BLYE HAD WAS THAT THERE WAS NO-ONE IN LONDON WHO HAD ANY IDEAS ON WHAT MORE COULD BE DONE THAN WE HAD ALREADY
DONE: AND THAT THEY WERE NOT PREPARED TO CONSIDER FOR EXAMPLE ANY LINK WITH STERLING IF THE EXCHANGE RATE CAME UNDER PRESSURE
AGAIN. THE PUS MIGHT ASK LITTLER WHAT KIND OF ASSISTANCE AND
SUPPORT HE HAS IN MIND.
7. WE CAN DISCUSS THESE ISSUES FURTHER WHEN I AM IN LONDON. I
DOUBT IF THERE WILL BE TIME FOR ME TO VISIT EACH DEPARTMENT
SEPARATELY SO PERHAPS THE PUS COULD ARRANGE A SMALL MEETING.
8. I WILL ALSO WANT TO TALK TO HIM AND PATRICK WRIGHT ABOUT THE
PROPOSED JIC PAPER.
YOUDE
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