APR, 09 '86 16:39 GIS HK
ut as you all know, the Banking Advisory Committee is
unanimously opposed.
Their argument is persuasive given
the profile of bank deposits in Hong Kong.
13.
The decisions that have been made - and have
-
had to be made have obviously been difficult with many conflicting factors involved. They are the most difficult that I have faced apart from the currency link. It seems to me that many Members do not understand the real reason for Legislative Council (not Finance Committee) involvement in the Hang Lung and OTB takeovers. While we were still clearly finding our way in an untried form of highly unpopular direct intervention, the need to approach the Legislative Council was not so much to provide money, which could have been arranged under the Exchange Fund Ordinance, but with Executive Council approval to agree special legislation to expropriate private assets, and to announce measures to assess possible shareholder compensation. Nationalisation if you like. Such action has not since been necessary. I hope it never will be again. Quite apart from anything else, Government has to find management for the three banks that it owns. It is our problem. The Hongkong and Shanghai Bank has been very helpful with secondments; but clearly enough is enough. Anything short of takeover clearly eases management problems, though poor management is often the source of trouble.
14.
Let me now in very broad and simplified terms describe the scope of the Exchange Fund. It contains the major part of Hong Kong's visible reserves
billion
-
Th
say $19
plus the note and coin backing say another $19 billion. This fund has been well managed for many years. It is held mainly in low risk liquid instruments in various hard currencies. Considerable surpluses have consequently been built up. Indeed the note and coin backing of $19 billion is free of interest in the hands of
-5-
P.6