TNAG-0379-FCO40-425-Sterling-assets-and-balance-of-payments-of-Hong-Kong-1973 — Page 286

ба

I. PA.

Mr eeble

Hong Kong

..

Dr Crowson

جو

12 Goodfellow 6.

I attended this meety. Trasm

repois a new moo

for the Gy

in 18

1. A meeting will be held in

at 10.30 am on 16 January to discuss developments in cur request that the Hong Kong Government should make ava 1.ble paper in which the Hong kong commercial banks can Fold weir

assets.

2.

Des.7/1

To recap, Hong Kong has no central bank or monetary authority, nor does it issue government paper. Consecuent the commercial banks have to hold their assets in sterling or other external currencies. To bring them within the scc. of the Sterling Agreement, the banas deposit their sterling with the Hong Kong Government (against a liability by that government expressed in Hong Kong dollars). Two problems

arise:

a.

The liong Kong Covernment guarantees the bank deposits at £1 equals US 2.60, while our guarantee them is at £1 equals US $2.40: and

b. The commercial banks are concerned about bildir position following the expiry or the Sterling aprecierila in September 1973.

Moreover, the Hong Aung Government has o exchange centre L powers.

3. Following representations in London by the Hong Le Financial Secretary, r haddon-Cave, in November. in ri..... arrangements were worked out to enable une

to withdraw £100m over 5 months. In his let or

1 December to mr addon-Cave setting out this arr Mr (then) Bell also said:

1

点

:

"In the course of our conversations, I put view that it would be helpful ... if there #.P in nong Kong Hong Kong Goverment paper expr secu Hong Kong dollars in which the ban.s co là invest of their surplus funds rather than nolcing them in external assets. You explained that you a been considering this question: you saw no Dugsili of taking action on it in the immediate fiture, vi agreed that it might be considered for possibl

act. some ti e after your nexɩ budget. I should like to repeat that we, for our part, consider that it would indeed be helpful if there were some asset of t.i. available, and to express the hope that you will give the matter serious and urgent consideration as scon you can. I should like to confirm that the un wc là ï¬ very willing to make available to you technical advice, if you should wish this."