Registry No.
SECURITY CLASSIFICATION
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Unclassified.
PRIVACY MARKING
..In Confidence
DRAFT
SUBMISSION
To:- Sir D Watson
PS/ Mr Royle
Copies
Mr Marshall
Mo Holland
Miss Peatl
No wilford or
HONG KONG'S FINANCIAL PROBLEMS
Type 1 +
From
A C Stewart STUART
Telephone No. & Ext.
Department HKIOD
On 16 July Mr Royle discussed the situation in
Hong Kong with Mr Marshall, Mr Holland, Miss Pestell
and myself.
2. We agreed that a number of difficult problems
were pending for Hong Kong. The present Sterling
Agreements expire on 24 September. A decision on what
if anything should replace them is under consideration
by the Prime Minister. We cannot yet say when a
decision is likely to be taken, and it is not possible
to say anything useful to/Hong Kong in advance of the
decision. All concerned are of course aware of Hong
Kong's interests.
3. The expiry of the present Sterling Agreement, whether or not it is succeeded by a similar arrangement, is likely to highlight the need for solutions to a
number of fundamental problems of financial structure
and management/ which have been pending in Hong Kong for
years. These include the management of the banks and
financial institutions generally as well as the control
of the reserves and the winding up of the Hong Kong Government's own guarantee to the banks.
4
A further problem which came to attention
recently is the question of HongKong's exchange-rate
(118281) Dd. 391599 1,500M 2/69 Hw.
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