TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 108

SECRET

DD 08010OZ HONG KONG

HKK

10017

GRS250

SECRET

20 OCT 1983

JOHY

IND

on Taken

DESKBY 080100Z

FM FCO 071630Z OCT 83

TO IMMEDIATE HONG KONG

23002 1

Mr. Hymn Нит

-25%

12710

TELEGRAM NUMBER 1020 OF 7 OCTOBER

FOLLOWING STRICTLY PERSONAL FOR FINANCIAL SECRETARY AND

CHIEF SECRETARY FROM GOVERNOR

49

30

1. MANY THANKS FOR YOUR TELS NO 1489 AND 1490. I SAW THE

CHANCELLOR WITH HIS ADVISERS THIS AFTERNOON. THEY WERE

METICULOUS IN RECOGNISING THAT THE DECISION IS FOR US AND IN

RECOGNISING THAT THEY WERE NOT DIRECTLY FAMILIAR WITH THE HONG

KONG SCENE. BUT THE IMPLICATIONS OF WHAT THEY SAID WAS CLEAR

THE RISKS OF A COLLAPSE OF THE HONG KONG ECONOMY ARE SUCH THAT

IF THEY WERE IN OUR SHOES THEY WOULD INTRODUCE THE SCHEME AND

SOON.

2.

SANDBERG SPOKE TO ME ON HIS DOUBTS ABOUT IT TODAY. HE WAS

PARTICULARLY CONCERNED WITH THE DIFFICULTY OF SETTING THE

RIGHT RATE: AND THE DANGERS FOR THE SMALLER LOCAL BANKS. HIS

FEELING WAS THAT WE SHOULD, IF POSSIBLE, DEFER A DECISION.

3. I HAVE CONSIDERED WHETHER TO ASK HIM TO RETURN FOR THE

WEDNESDAY EXCO. IN FAVOUR OF DOING SO IS THE ADVANTAGE OF HAVING

THE CHAIRMAN OF THE MAIN NOTE ISSUING BANK IN HONG KONG WHEN

WE TAKE THE DECISION. AGAINST THIS IS THE SPECULATION HIS

SUDDEN RETURN MIGHT CAUSE.

WHAT WOULD YOU ADVISE? MY OWN INCLINATION IS TO WARN HIM

THAT WE MAY WELL HAVE TO DIVIDE IN THE MIDDLE OF THE WEEK I

SUGGEST THAT HE MAY WANT TO BE THERE.

5. PLEASE WOULD ONE OF YOU TELEPHONE ME AT THE SHERATON PARK

TOWER HOTEL TELEPHONE NO 01-235-8050 ROOM 1001 AT 0700 LONDON TIME

(2PM HONG KONG TIME) SATURDAY TO LET ME HAVE YOUR VIEWS ON THE

ISSUE OF SANDBERG'S RETURN.

1

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