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management is incoherent. Whatever the problems down the line," the various threads (together, no doubt, with other threads from the private sector) converge on the desk of the Financial Secretary. Through his ability, and through the force of his personality, he dominates the scene in the public sector. But the timorous question is: what happens if Mr Haddon-Cave falls under a bus, or if the monstrous load of work which he carries so resiliently takes its toll? · I suspect that when he is away, on leave or otherwise, there is no-one who has the knowledge, overall grasp and authority to do other than keep things ticking over until he returns. There is a further implication. It seems to me that this form of management, successful though it may be in its own terms, does set limits on the extent to which a more active monetary policy could be pursued.
14. The second point relates to the role of the Hong Kong Bank, as the Government's chosen instrument for most of such "central banking" functions as are performed in Hong Kong. Because so much of the manipulation of this instrument is on an informal, indeed personal, basis, a good deal depends on the nature of the personal relationships between the Financial Secretary and the management of the Hong Kong Bank. No doubt it is true that even in countries which have sophisticated institutions for monetary management, a good deal depends on informal and perhaps even personal relationships with the banking sector; perhaps the main difference is that in the latter context the position of monetary managers is buttressed by reserve powers which are formidable on paper even if rarely fully deployed in practice. This is not to say that the Hong Kong Government has no powers over the Hong Kong Bank: it could, for example, alter the distribution of Government balances. But it does, possibly, mean that a consensus between the Government and the Hong Kong Bank can most easily be reached when any action contemplated is conformable to the commercial objectives of the Hong Kong Bank. For example. During the recent stock exchange boom, the Financial Secretary considered that credit for stock exchange purchases should become
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6 CONFIDENTIAL NTIAL
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