1513102
REFERRED MR PAUL FOR DIST ADVICE
LNMBAN 7831
SECRET
PP FCOLN
HMLNAN 1346
FM HOKON TO FCOLN
151130Z MAY
GRS 600
SECRET
FM HONG KONG
TO PRIORITY FCO
TELNO 1598
OF 151130Z MAY 90
о
SUGGEST REE TEC
HKC102/2
12) нкс
PERSONAL FOR PAUL HKD. FROM GOVERNOR
YOUR TELNO 548% CENTRAL BANKING FUNCTIONS
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нис
RESY
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Miss Marosen
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have
The reffée ?
w/137
1. I UNDERSTAND THAT DURING HIS VISIT PIERS JACOBS DISCUSSED IN GENERAL TERMS WITH THOSE CONCERNED THE BANK OF ENGLAND PAPER ON THE NEED FOR A CENTRAL MONETARY INSTITUTION (CMI) IN HONG KONG. I ALSO DISCUSSED THE SUBJECT BRIEFLY WITH SIR PETER MIDDLETON WHEN HE WAS HERE.
2. WHILST WE ACCEPT THAT THE ESTABLISHMENT OF A CMI WOULD MAKE OUR MONETARY ARRANGEMENTS NEATER. WE FEEL THAT THE RIGHT ANSWER IS TO PROCEED GENTLY. CONTINUING AS WE ARE, AND MOVING CAREFULLY IN THAT DIRECTION WITHOUT FORMING 700 DOCTRINAIRE A VIEW OF OUR PRECISE DESTINATION. WE ARE CONCERNED THAT IF WE MOVE NOW OR HASTILY, WE MAY DRAW AN UNHELPFUL REACTION FROM THE CHINESE. THE FINANCIAL COMMUNITY MAY ALSO BECOME ALARMED ABOUT THE POSSIBILITY OF GREATER INTERVENTION BY GOVERNMENT THROUGH A CMI.
3. WE ABREE ENTIRELY WITH THE ARGUMENT IN THE PAPER ABOUT MANPOWER. FOR CONFIDENCE IN OUR MONETARY SYSTEM AND IN PARTICULAR OUR CURRENCY TO BE SUSTAINED. THOSE MANAGING IT MUST BE, AND CLEARLY BE SEEN TO BE, IN A POSITION TO CARRY THAT RESPONSIBILITY COMPETENTLY, OPERATING WITHIN A PROPER ORGANISATIONAL FRAMEWORK AND WITH ADEQUATE SUPPORT,
4. WE RECOGNISE THAT IN THIS AREA WE RE VULNERABLE. AS WE ARE OVERLY DEPENDENT ON THE SKILLS OF A FEW INDIVIDUALS, WE HAVE CONSIDERED THIS CAREFULLY. AT THIS STAGE WE FEEL THAT THE RIGHT WAY FORWARD IS FOR FIRST TO TRY TO MAXIMISE WHATEVER FLEXIBILITY IS AVAILABLE WITHIN THE CIVIL SERVICE STRUCTURE TO BUILD UP A BETTER FRAMEWORK. THIS MOVE IS NOT/NOT INCONSISTENT WITH THE ESTABLISHMENT OF A CMI IN DUE COURSE SHOULD WE DECIDE TO GO FURTHER IN THAT
DIRECTION.
5. THERE IS SOME SCOPE FOR IMPROVEMENT IN THE ORGANISATION OF THE MONETARY AFFAIRS BRANCH TO ENABLE IT TO CONTINUE TO PERFORM İTS ROLE IN MONETARY MANAGEMENT EFFECTIVELY AS PART OF THE ADMINISTRATION, WE ARE NOW TAKING FORWARD AS A LOW-KEY INTERNAL RE- ORGANISATION PROPOSALS INVOLVING THE ESTABLISHMENT OF AN OFFICE WITHIN THE MONETARY AFFAIRS BRANCH WITH CLEAR RESPONSIBILITY FOR MONETARY MANAGEMENT. KEEPING EXISTING REPORTING LINES TO THE FINANCIAL SECRETARY AND WITHIN THE BRANCH, THIS NEW OFFICE WILL BE OF EQUIVALENT STATUS TO THE OFFICE OF THE COMMISSIONER OF BANKING
THIS IS A COPY
THE ORIGINAL HAS BEEN
CLOSED UNDER
FOI EXEMPTION NO.
127 (1)