SECRET
FM HONG KONG
TO PRIORITY FCO
TELNO 1524
OF 221130Z APRIL 88
INFO PRIORITY PEKING
2
SECRET
HKC 105/1
7
124640 MDLIAN 2021
TOP COPY
DIST ?
Q
YOUR TELNO 211: INVOLVEMENT OF THE BANK OF CHINA IN EXCHANGE MARKET INTERVENTION
.
1. YOUR TUR GAVE SUPPORT TO OUR PROPOSAL (MY TELNO 231) TO INVOLVE THE BANK OF CHINA IN PROVIDING SERVICES TO THE EXCHANGE FUND IN EXCHANGE RATE INTERVENTION SPECIFICALLY THE PROPOSAL INVOLVED THE USE OF THE EXCHANGE FUND TO INDEMNIFY THE BANK OF CHINA AGAINST ANY EXCHANGE LOSS THAT MAY BE INCURRED WHEN THEY BUY US DOLLARS IN SUPPORT OF THE LINKED EXCHANGE RATE ON THEIR OWN ACCOUNT BUT STRICTLY IN ACCORDANCE WITH OUR INSTRUCTIONS.
2. WE HAVE SINCE NEGOTIATED WITH THE BANK OF CHINA. THE NEGOTIATIONS WERE CARRIED OUT BETWEEN THE DEPUTY SECRETARY FOR MONETARY AFFAIRS AND MR ZHANG XUEYAO, THE GENERAL MANAGER OF THE HONG KONG BRANCH OF THE BANK. THEY WENT SMOOTHLY AND AN AGREEMENT WAS SIGNED ON 21 APRIL. OUT INITIAL WORRY THAT THE BANK OF CHINA
MIGHT DURING THE NEGOTIATIONS ATTEMPT TO EXACT A PRICE DID NOT MATERIALISE. MR ZHANG AND HIS COLLEAGUES HAVE BEEN VERY
CO-OPERATIVE. WE UNDERSTAND THAT THE HEAD OFFICE OF THE BANK IN
PEKING HAS BEEN CONSULTED AND HAS GIVEN FULL SUPPORT.
WILSON
YYYY
DISTRIBUTION
50
ΜΑΙΝ
49
HONG KONG AGREEMENT RESTRICTED
LIMITED
HKD
HD/FED
RESEARCH (FE)
PUSD
PS/LORD GLENARTHUR
PS/MR EGGAR
PS/PUS
MR MCLAREN
MR GILLMORE
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