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L.vernment, reserves of 70 billion.. I don't know what else the Exchange Fund has in it because I don't need to know. So I am not in a position to say whether those figures are right or
wrong.
Question 14: (inaudible)... expressed Chinese concern that if the 60 billion dollars is to be drawn from the Exchange Fund to the reserves then it is going to affect the stability of the Hong Kong dollar and that means, well they interpret it as, affecting the overall financial position of Hong Kong. I suppose you can't answer this question?
Mr Macleod: Well, I am assured that there are many other factors which ensure the stability of the Hong Kong dollar, not just the Exchange Fund. And, of course, the prime one immediately apparent is the link. The link to the US dollar. So we are not dealing here with a simple relationship of the balance in the Exchange Fund to the stability of the currency. There are a number of other factors involved and, obviously, the main one is the link. No doubt Monetary Affairs Branch could give you a list of other items.
Question 15: I thought the link was Exchange Fund?
maintained by the
Mr Macleod: The link is, I suppose it is true to say, assisted by the Exchange Fund. But the link exists, I had better not say, in the abstract, em, the link, in a sense, has a life of its own. That is to say as long as the link exists and is credible, is backed by government policy, then it exerts a stabilising influence on the dollar. But I think these are not matters which we deal with in looking at the financing of the airport. These are matters which Monetary Affairs Branch look at when they look at control of the currency.
Question 16: But I think the Financial
think the Financial Secretary told Legislative Councillors that the government is not going to draw on money from the Exchange Fund to finance the project.
So, in effect, does that mean that if you have to, say, transfer back the money from the Exchange Fund to the fiscal reserves, or whatever, to build the project that means you are going to draw money from the Exchange Fund?
Mr Macleod: No, No. When anyone says they are not drawing on the Exchange Fund they mean that they are not drawing on the Exchange Fund's own money. It is quite different from what we may have on deposit with the Exchange Fund at any one time. That is actually the Hong Kong Government's money. It is the fiscal reserves. So it is not the Exchange Fund's money. It is on deposit with them.
Question 17: Well, you are dealing with the fiscal reserves. So, can you confirm that 60 of the 70 something billion dollars of the fiscal reserves has been transferred to the Exchange Fund?
Mr Macleod: No. No I can't.