TNAG-0457-FCO40-522-Future-of-financial-and-economic-policy-of-Hong-Kong-1974 — Page 37

• CONFIDENTIAL

bear responsibility for internal security and any other measures that might be necessary. HMG have been considering whether the Hong Kong authorities ought not to have wider powers of control over finance and particularly banking. Such a move would certainly be opposed by pri- vate interests, and the authorities show no signs of wanting a change at

present.

The view of the meeting was that the monetary situation in Hong Kong contained an element of instability and it was in HMG's interests that it should be remedied; it would however be wrong and impracticable to try to impose a ready-made solution that the Hong Kong Government did not want. The organisational defects in the Government which put the Financial Secretary under too great a strain also needed to be cured. A gradual and tactful approach was called for, and whatever action was decided on, it should be carried out with the Governor's agreement and the Financial secretary's acquiescence.

The meeting decided that when the Governor was on a visit to London the opportunity should be taken for someone at the appropriate level at the FCO to talk to him on the subject. It would be well if the Governor was given a paper which he could study beforehand. Mr Barratt said that if the FCO requested, the Treasury would co-operate in pro- ducing the paper.

As a preliminary to this, it was agreed that it would be well for a letter to be sent to the Governor from the FCO, possibly at Ministerial level, asking him to let us know his thinking on the problems discussed at the meeting.

JPL Grozm

GW

JF I GWYNN

December 1973

CONFIDENTIAL