TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 167

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Private Secretary

FROM:

CSR Giffard DUSS

DATE:

30 September 1983

26

THE HONG KONG DOLLAR

1.

The Chancellor of the Exchequer discussed the financial situation in Hong Kong with his officials this morning. He takes the view, subject to the Secretary of State's concur- rence, that it would be right to send a Treasury official (Peretz) and the Chief Economic Adviser to the Bank of England (Goodhart) to Hong Kong this weekend to discuss the Financial Secretary's plan to require the denomination of Certificates of Indebtedness in US dollars.

2.

The Chancellor's view is that it is welcome that the Hong Kong Government have a plan of their own, and on the face of it it seems likely to be the best plan in the circumstances. If they are to go ahead, it is probably best that they should do so quickly, ie next week.

3. If the Secretary of State agrees, the Chancellor will propose this to the Prime Minister.

4.

I recommend that the Secretary of State agree.

5. As I understand it, there is no commitment in this suggestion, and it is undoubtedly the best we can do to help the Governor in Hong Kong to cope with his difficult financial situation.

6.

I have told Mr Unwin that we will give him the Secretary of State's view as soon as possible. We shall also need urgently to be in touch with the Governor.

7. Treasury have repeated their assurances that consideration of this subject will be kept to a strict need to know basis.

30 September 1983

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