SECRET
SECRET
FM FCO
TO IMMEDIATE HONG KONG
TELNO 149
OF 03160OZ FEBRUARY 92
INFO PRIORITY PEKING, UKREP JLG HONG KONG
Blooli
TOP COPY
28
060412
MDHOAN 9113
Q DIST ?/ Мав lall
M
Mr Jxx
fe
PERSONAL FOR GOVERNOR
PEKING PERSONAL FOR AMBASSADOR
UKREP JLG HONG KONG PERSONAL FOR PAUL
©
14
YOUR TELNOS 124 AND 175: CONFIDENTIAL FINANCIAL DIALOGUE
1.
2.
WE HAVE NO COMMENTS ON THE PROPOSED AGENDA ITEMS A OR B.
ON ITEM C, THE PROPOSED NEW LIQUIDITY ADJUSTMENT FACILITY, WE THINK IT WOULD BE PREFERABLE TO AWAIT THE OUTCOME OF THE PRESENT REVIEW OF MONETARY ARRANGEMENTS WITH WHICH BANK OF ENGLAND OFFICIALS ARE ASSISTING, BEFORE REACHING DEFINITE CONCLUSIONS ON THIS AND BRIEFING THE CHINESE IN DETAIL. COULD YOU PLEASE CONSIDER THIS FURTHER: PERHAPS IT WOULD BE BEST JUST TO GIVE THE CHINESE AN INDICATION OF PRELIMINARY THINKING?
EXCHANGE FUND
3.
ON AGENDA ITEM D, WE ALSO THINK DEFINITE DECISIONS SHOULD AWAIT THE OUTCOME OF THE REVIEW MENTIONED IN PARA 2. SUBJECT TO THIS HOWEVER, WE ARE CONTENT IN PRINCIPLE WITH THE PROPOSAL THAT THE FINANCIAL SECRETARY SHOULD ANNOUNCE IN DUE COURSE THE GOVERNMENT'S INTENTION TO PROVIDE GREATER TRANSPARENCY REGARDING THE EXCHANGE FUND: THAT THE OFFICE OF THE EXCHANGE FUND SHOULD THEN PUBLISH A SUMMARY OF THE FUND'S YEAR-END ACCOUNTS FROM 1986 TO 1990: AND THAT THERE WOULD THEN BE ANNUAL PUBLICATION OF THE FIGURES SIX MONTHS IN ARREARS. WE AGREE THAT A TIME-LAG OF ABOUT SIX MONTHS IS DESIRABLE TO REDUCE THE RISK OF THE FIGURES CAUSING DIFFICULTIES WITH THE MARKETS, EG IF THEY SHOW A LARGE DECLINE IN THE RESERVES. WOULD YOU MAKE CLEAR IN THE INITIAL ANNOUNCEMENT THAT THE FIGURES WOULD BE PUBLISHED AT A CERTAIN TIME EACH YEAR (PRESUMABLY JULY?) SO THAT A ROUTINE ANNOUNCEMENT WILL BE EXPECTED? WE WOULD LIKE TO BE CONSULTED AGAIN BEFORE ANY DECISION TO PUBLISH THE FIGURES MORE FREQUENTLY OR WITH LESS OF A TIME-LAG.
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