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4. I doubt the Treasury will consider that this option has been properly explored on the basis of these two pieces of correspondence. I think therefore we shaml have to ask Hong Kong to get the Hong Kong Bank to try to quantify the known costs as offered in Mr Gray's letter. In doing so I think we should set out to Hong Kong exactly what it is we wish them to ask the Bank to cost. Unless we do this we can never be sure HKG will ask the right questions.

5.

If you agree, I should be grateful for any comments you or Mr Lane may have on the attached draft.

Yas aye

мля

M V Stone

Hong Kong Department

cc: Mr Lane Economic Advisers

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