ها
GRS 300
SECRET
FM HONG KONG 051050Z OCT 83
TO IMMEDIATE F C O
SECRET
TELEGRAM NUMBER 1478 OF 5 OCTOBER
PERSONAL FOR CLAFT.
FOLLOWING FOR LITTLER TREASURY FROM PERETZ.
HICK 10017
20
Mi Hur
1. DISCUSSIONS TODAY CONFIRMED IMPRESSIONS REPORTED IN TELNO 1471 OF 4 OCTOBER. NOTHING FURTHER OF SUBSTANCE
TO REPORT AT THIS STAGE, OTHER THAN ON DETAIL, ON WHICH
I WILL REPORT ON ARRIVAL TOMORROW (ARRIVE ON FLIGHT BA20).
2. ON THE CURRENCY LINK, NONE OF THOSE WE HAVE SEEN WHO HAS BEEN INVOLVED IN DEVELOPING THE PROPOSAL THINK IT WOULD MAKE SENSE FOR THE LINK TO BE TO ANYTHING OTHER THAN THE DOLLAR. BOTH THE BANKERS WE SPOKE TO WERE CLEARLY OF THIS VIEW.
THE DEA OF A STERLING LINK WAS RAISED MORE AS A QUESTION
OF POSSIBLE POLITICAL SIGN.HFICANCE, WITH AT LEAST SOME POLITICAL ARGUMENTS BEING AGAINST. THE SCHEME AS NOW CONSTRUCTED WOULD HAVE A DOLLAR LINK.
3. ON TIMING, WE QUESTIONED BILL BROWN (CHARTERED BANK AND CHAIRMAN OF THE HONG KONG ASSOCIATION OF BANKS) THIS MORNING ON THE MARKET ASPECTS. HE ACCEPTED THAT THE ABSENCE OF THE EXECUTIVE COUNCIL MEANT THAT IMPLEMENTATION COULD NOT BE UNTIL NEXT WEEK. HE ALSO BELIEVED THAT A WEEKEND WOULD BE BEST: NT WILL TAKE THE BANKS THEMSELVES A LITTLE TIME TO UNDERSTAND THE DETAILS AND A PERIOD OF MARKET CLOSURE IS ALMOST ESSENTIAL. THE EXCHANGE MARKETS ARE THIN AT PRESENT, PARTLY AWAITING A FURTHER ANNOUNCEMENT ABOUT THE GOVERNMENT'S PROPOSED SCHEME. IN THESE CIRCUMSTANCES, AND ASSUMING NO UNEXPECTED OUTCOME
TO THE LONDON TALKS (HE DID NOT SUGGEST THAT THE MARKET WAS EXPECTING MUCH), HE THOUGHT THERE WAS A REASONABLE CHANCE OF SURVIVING UNTIL 14TH WITHOUT ANY MAJOR REVERSAL.
4. FCO PLEASE PASS IMMEDIATE TO LITTLER HMT AND PPS/CHANCELLOR.
YOUDE
(REPEATED AS REQUESTED)
LIMITED
HD/HKD
HD/ERD
PS
PS/MR LUCE
PS/PUS
MR GIFFAFD MR EVANS
MR DONALD
COPIES TO:-
PS/CHANCELLOR
PS/ECONOMIC SECRETARY PERMANENT SECRETARY
SIR T BURNS
MR LITTLER
MR INWIN
MR LAVELLE
H M TREASURY
MR D HOLLAND BANK OF ENGLAND
SECRET
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