XN000022-1989-06-05 — Page 4

MONDAY, JUNE 5, 1989

"THERE ARE SPECIFIC MATTERS THAT REQUIRE IMMEDIATE ATTENTION. WE UNDERSTAND THAT SOME HONG KONG CITIZENS ARE EXPERIENCING DIFFICULTIES IN LEAVING BEIJING.

WE ARE REQUESTING THE HONG KONG GOVERNMENT TO ASK THE BRITISH EMBASSY TO EXTEND EVERY ASSISTANCE ΤΟ PROTECT THEM AND TO HELP THEM LEAVE BEIJING. A NUMBER OF OUR COLLEAGUES FROM VARIOUS COMMERCIAL FIRMS HAVE OFFERED THEIR STAFF AND VEHICLES IN THEIR OFFICES IN BEIJING TO HELP IN THIS EFFORT SHOULD TI!! BRITISH EMBASSY SO REQUIRE.

"WE ARE ALSO ASKING THE HONG KONG GOVERNMENT TO ESTABLISH A TIL PHONE LINE IN HONG KONG FOR CITIZENS HERE WHO MAY WISH ΤΟ SEEK ADVICE AND ASSISTANCE FOR THEIR RELATIVES WHO ARE SEEKING TO LEAVE BING. MEANWHILE, WE WOULD SUGGEST TO THE PEOPLE OF HONG KONG THAT TI'⠀⠀ SHOULD NOT GO TO BEIJING FOR THE TIME BEING IF THERE IS NO ULGENT NEED TO DO SO UNTIL THE SITUATION THERE IS MORE SETTLED.

I

NO QUESTION OF BANKS NOT ABLE TO MEET COMMITMENTS: FS

SPEAKING TODAY (MONDAY) IN RESPONSE TO QUESTIONS ABOUT THE WITHDRAWAL OF DEPOSITS FROM THE BANK OF CHINA AND OTHER CHINA RELATED BANKS, THE FINANCIAL SECRETARY, MR PIERS JACOBS, EMPHASIZED THE SOUNDNESS OF HONG KONG'S BANKING SYSTEM AND POINTED OUT THAT THERE WAS NO QUESTION OF BANKS BEING UNABLE TO MEET THEIR COMMITMENTS.

WHILST MR JACOBS INDICATED THAT HE UNDERSTOOD VERY WELL THE STRENGTH OF FEELING, HE ASKED THAT PEOPLE SHOULD REFLECT ON THE POSSIBLE EFFEFT THAT LARGE SCALE WITHDRAWALS MIGHT HAVE ON

ANY

BANKING SYSTEM.

"THE CHINA RELATED BANKS ARE AN INTEGRAL PART OF THE HONG KONG ECONOMY AND HEAVY WITHDRAWALS COULD WELL HAVE AN ADVERSE EFFECT DOMESTICALLY," HE SAID.

MR JACOBS POINTED OUT THAT ALREADY THERE HAD BEEN SOME EFFECT IN THAT THERE HAD BEEN A SIGNIFICANT INCREASE IN MARKET INTEREST RATES DESPITE SOME INTERVENTION BY THE EXCHANGE FUND. THIS COULD WELL HURT BORROWERS FROM THE BANKING SYSTEM AND WOULD NOT BE GOOD FOR BUSINESS.

ON THE MONEY MARKET, MR JACOBS SAID THAT IN VIEW OF THE TIGHTNESS OF INTER-BANK LIQUIDITY, THE EXCHANGE FUND TODAY INJECTED ADDITIONAL LIQUIDITY TOTALLING $194 MILLION INTO THE INTER-BANK MARKET.

THE FINANCIAL SECRETARY REITERATED THAT THE EXCHANGE FUND WOULD BE USED AS NECESSARY TO HELP MAINTAIN STABILITY IN THE BANKING SYSTEM AND IN THE EXCHANGE VALUE OF THE HONG KONG DOLLAR.

/AS FOR