PJYAKF
CONFIDENTIAL
Reference...
32
Mr Edwards, Legal Advisers
HKC 105/1
HONG KONG EXCHANGE FUND ORDINANCE: TO AMEND OR NOT TO AMEND
A
*they
D
E,F
G
H,I
J
H
B,D
I
J
I now
1.
It has taken me some time to put these papers together. attach the complete file as you requested but I have also attached to this minute the principal papers in an attempt to make events clearer. As I see it, the situation is as follows:
2.
Hong Kong (Telno 804) have identified a mistake in Section 3(3) of the Ordinance, do not want to put it right, but want our agreement to leave things as they are. All the other points of interpretation in telno 804 stem from the error in the text of the word "on" for "of".
3. Examing the Ordinance has drawn attention to other ambiguities which Mr Whomersley listed in his minutes of 16 and 29 March. Following advice from the Bank of England (3 April) and the Treasury (18 April) FCO telno 914 issued taking up the associated points:
(a) transfer from the General Revenue not covered by Section
3(3);
(b) no right to borrow unsecured;
(c) whether the borrowing should be subject to the limit
specificed in Section 3(4);
(d) advisability of reducing the borrowing limit in Section
3(3).
4. Hong Kong telno 1453 and their Legal Adviser's memo of 5 May argue for letting things stay as they are. The Bank of England (letter of 15 May) and Treasury (written confirmation still awaited) are prepared to go along with Hong Kong's views on points 3(b) to
(d) above.
Mr
5.
I see difficulty, now that Hong Kong have discovered an error in the wording of the Ordinance, in ignoring it. I can understand that rectifying the error will cause embarrassment if done in isolation. However in paragraph 4 of their telno 1453 Hong Kong pointed out that there are other matters (unspecified) that need revision. Whomersley has highlighted several points of ambiguity which he believes might be better for clarification in his minutes and marginal comments on the Hong Kong Legal Adviser's memo. Mr Elston (Bank of England) has also suggested in the penultimate sentence of his letter of 15 May the possibility of expressing the borrowing limit as a fixed proportion of assets, so reducing the need for periodic adjustments in the borrowing limit. This point might also
CONFIDENTIAL
CODE 18-77