TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 111

SECRET

Sir D Watson

PS Mr Royle

HONG KONG'S FINANCIAL PROBLEMS

Nor submitted tee

the Hollands

behind

redraft the latter's muinté 1914

فلتسه

P.A

1. 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 proble ems were pending

for Hong Kong. The present Sterling Agreement ends in September.

It is not known what will follow it, although it is becoming

nothing increasingly unlikely that we will offer Hong Kong anything in

replacement. Whatever is offered, it is important that we

should have as full and as meaningful discussions with Hong

Kong in advance as possible.

3. The ending or modification of the Sterling Agreement will

give a new importance to the solution of a number of problems

of financial 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.

4. We agreed that Hong Kong is very short of people both to

plan and to carry out financial reforms. They are also

ous

suspicious of requirements which have not been a part of Hong

Wong's success story in the past, and, especially, when they

are pressed on the Hong Kong Government by HMG, whose financial

performance the Hong Kong establishment affect to despise.

SECRET

/5.