The discharge of borrowed money obligations with money taken from the Fund clearly constitutes a use of the Fund. In my opinion if the Fund is used by the Financial Secretary in that way for purposes affecting the Hong Kong Dollar's exchange value that is a "use" of the Fund within the express provisions of section 3(1). If the courts were to find, contrary to my view, that the drafting of section 3(1) was not clear enough to confer a borrowing power then in my opinion they would construe the existence of an implied power to borrow pursuant to section 40 if to borrow was, as a matter of fact, reasonably necessary to enable the Financial Secretary to achieve the purposes set out in that provision.
3.
Section 3 (2) contains the Financial Secretary's powers to hold/invest the Fund. The drafting employed in this subsection is not as wide as that in section 3(1). The various methods of holding/investing the Fund are specified. It may be held in various currencies, in gold or silver or approved securities. The Financial Secretary
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may for the account of the Fund buy or
sell such currency or such exchange or gold or silver or securities accordingly
A
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There is therefore an express power to buy and sell currencies etc. but no express power to borrow. However it is my view that section 40 of Cap. 1 can be applied to this section. For instance I am instructed that from time to time one of the Exchange Fund's Managers will miscalculate the value of the Exchange Fund assets available to him for investment on a given day. I am instructed that miscalculations may arise as a result of the ever-fluctuating currency exchange rates or simple human error. The size of the miscalculation will be small but its effect is that the Manager's have purchased an asset partially with their own money and have thereby provided an overdraft facility to the Exchange Fund. The Exchange Fund currently pays interest on such facilities at a rate no greater than that which it receives on the portion of the investment purchased by the facility. It therefore suffers no loss but there is, technically, an unsecured borrowing by the Fund from the Manager. In my opinion, if it can be established as a matter of fact that this type of mismatch is a feature of fund management and that to avoid unwinding the investments entered into and other adverse consequences a practical arrangement of this sort is reasonably necessary to enable the Financial Secretary to invest the
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