TNAG-1266-FCO40-1615-Economic-policy-in-Hong-Kong-1983 — Page 34

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condition of their continued presence. Large trading

companies also made clear to Government that they valued the services of finance companies in this disputed

area.

11.

The uncertainty of definition was clearly undesirable. But news that the Ordinance might be amended caused consternation amongst the finance companies and the large trading companies. There were forceful representations that the amendments then being considered would unfairly alter the ground rules which finance companies had carefully studied before establishing themselves in Hong Kong and that among other things they would destroy an orderly and efficient inter-company money market. The Government, therefore, found itself in a 'no win' position. This is not unusual, but when dealing with banking matters it is very important to remember that popularity must take a back seat to the responsibility for protection of the system as a whole and so this is what our sights were set on at that time.

During the time the views of bankers and finance companies were being considered and we were making up our

minds about what should be done, the full extent of the

problems of certain financial institutions in overseas centres, stemming mainly from inflationary pressures and the oil crisis of 1974/75 became apparent. These did not impact seriously on Hong Kong, but common sense suggested that in the light of these problems, the time was not right for a radical reshaping of Hong Kong's financial structure.

12.

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