SECRET
MDAD
001444
TO INFORM AND BRIEF THE CHINESE BEFORE ANNOUNCING AND IMPLEMENTING LAF.
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(D) DISCLOSURE OF INFORMATION ON THE EXCHANGE FUND THE FINANCIAL SECRETARY, WITH THE SUPPORT OF THE EFAC, HAS DECIDED THAT IT WOULD NO LONGER BE APPROPRIATE TO MAINTAIN SECRECY OVER THE SIZE OF THE EXCHANGE FUND, AND THAT SIMPLE SUMMARY INFORMATION ON THE AUDITED ACCOUNTS OF THE FUND SHOULD BE PUBLISHED ON AN ANNUAL BASIS. I BELIEVE, THIS IS RIGHT AND THAT IT IS TIME WE MADE SUCH A MOVE. THE F.S. PROPOSES TO ANNOUNCE THE DECISION TO DISCLOSE MORE INFORMATION ON THE EXCHANGE FUND, AND TO PROVIDE A SIMPLIFIED BALANCE SHEET, IN HIS BUDGET SPEECH ON 4 MARCH. THIS WOULD BE FOLLOWED BY A PRESS BRIEFING. WE BELIEVE THAT DISCLOSING THE SIZE OF THE FUND WOULD BOOST PUBLIC CONFIDENCE IN THE FINANCIAL STRENGTH OF HONG KONG, AS WELL AS INCREASING TRANSPARENCY AND PUBLIC ACCOUNTABILITY REGARDING THE EXCHANGE FUND. THE IMF, VARIOUS CREDIT-RATING AGENCIES AND THE JAPANESE EXIMBANK HAVE ALL INDICATED THAT SUCH DISCLOSURE WOULD BE LIKELY TO BE HELPFUL. AGAIN, WE THINK THE CHINESE SHOULD BE TOLD OF THIS IN ADVANCE.
(E) ISSUING OF HONG KONG BANK NOTES BY THE BANK OF CHINA WE ARE READY TO LISTEN TO ANY FURTHER POINTS THE CHINESE MAY HAVE ON THIS POINT, AND TO DISCUSS WHETHER THE TIME HAS NOW COME TO BEGIN TECHNICAL DISCUSSIONS.
3. WE WOULD LIKE THE NEXT MEETING TO BE HELD IN THE WEEK COMMENCING 10 FEBRUARY OR THE FOLLOWING WEEK, IN EITHER PEKING OR HONG KONG. IF YOU ARE CONTENT, WE WOULD BE GRATEFUL IF PEKING WOULD APPROACH THE CHINESE SIDE FOR A DATE. THE SUBJECTS CAN ALL BE COVERED IN ONE DAY.
WILSON
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ADVANCE
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