CONFIDENTIAL
8
- an unwieldly path of arbitrage through cash which probably
led to wider variations away from 7.80 than strictly necessary;
- the difficulty of successful arbitrage implying losses either
for the net issuers of notes (HKB and Standard Chartered) or the main net receiver and retirer of notes (Bank of China);
- limits on interest rate flexibility which had led to the need
for direct intervention.
CONFIDENTIAL