CONFIDENTIAL
regulation have been raised. In an
the interesting contrast Monetary Authority of Singapore refused BCCI applications for an offshroe licence in
in 1973, 1980 and 1982. Piers Jacobs, the outgoing financial secretary is quoted as saying that Hong Kong
exercised could perhaps have
' residual discretion' processing applications.
more
in
Putting events in a wider perspective, the open and unrestricted nature of Hong Kong markets permits large speculative movements as confidence changes which suggests a restrained reaction to recent financial instability. The anchor for economic policymaking, a fixed link to the US dollar, has held firm during recent events despite occasional speculative surges resulting from increases in inflation. The first IMF examination of Hong Kong in February this year was positive both of the overall conduct of economic policy and supported maintenance of the fixed exchange rate to further economic stability.
External events, notably agreement on PADS and the likely US renewal of MFN status for China have considerably brightened the future prospects for Hong Kong and growth, which had languished at 2.5 per cent in 1989 and 1990 looks set to rise towards the official forecast of 5 per cent over the course of this year. As growth picks up criticism of government performance may well become more muted.
Economic Advisers
22 August 1991
CONFIDENTIAL