See
HKK
20
10017
:
SECRET
23791
00 ATHENS
GRS 942
SECRET
FM F C O 111835Z OCT 83
TO IMMEDIATE ATHENS
TELEGRAM NUMBER 385 OF 11 OCTOBER
FOLLOWING PERSONAL FOR BONE FROM PRIVATE SECRETARY
HONG KONG PROPOSED FINANCIAL MEASURES
1. ON 12 OCTOBER THE GOVERNOR OF HONG KONG PROPOSES TO PUT
TO THE EXECUTIVE COUNCIL THE SCHEME TO STABILISE THE HONG KONG
DOLLAR. THERE IS A POSSIBILITY (NO MORE) THAT EXCO WILL BE
OPPOSED TO THE SCHEME NO DECISIONS ARE REQUIRED NOW SINCE
SIR E YOUDE WILL REPORT HIS DISCUSSION WITH EXCO BEFORE ANY
ACTION IS TAKEN. BUT THE SECRETARY OF STATE MAY WISH TO HAVE
SOME OF THE BACKGROUND NOW SINCE URGENT DECISIONS MAY BE
REQUIRED BY THE EVENING OF 12 OCTOBER ON WHETHER TO SUPPORT THE
GOVERNOR IN THE EVENT THAT HE WISHES TO INTRODUCE THE SCHEME IN
THE FACE OF EXCO'S OPPOSITION. EVEN IF EXCO ARE CONTENT, THE
SECRETARY OF STATE WILL BE ASKED TO APPROVE A PROPOSAL THAT
DOLLERS 250 MILLION SHOULD BE TRANSFERRED FROM THE EXCHANGE FUND TO
GENERAL REVENUE ACCOUNT TO ENABLE THE SCHEME TO GO AHEAD.
2 THE SECRETARY OF STATE IS AWARE OF THE GENERAL BACKGROUND.
IN THE VIEW OF TREASURY OFFICIALS THE PROPOSED MEASURES ARE
TECHNICALLY FEASIBLE. THE CHANCELLOR HAS NOT SOUGHT TO
DISSUADE THE GOVERNOR FROM GOING AHEAD. THE PRIME MINISTER HAS
NOTED THE HONG KONG GOVERNMENT'S INTENTIONS.
THE SCHEME HAS THREE COMPONENTS
3
(I)
TO ISSUE AND REDEEM AGAINST US DOLLARS, AT AN
EXCHANGE RATE FIXED BY THE AUTHORITIES, THE
CERTIFICATES OF INDEBTEDNESS ISSUED BY THE EXCHANGE
FUND TO BANKS ISSUING HONG KONG DOLLAR NOTES
4
(II)
A SIMULTANEOUS ABOLITION OF THE WITHHOLDING TAX ON
INTEREST ON HONG KONG DOLLAR DEPOSITS
(III)
A TRANSFER OF HK DOLLARS 250 MILLION FROM THE EXCHANGE FUND
TO GENERAL REVENUE ACCOUNT IN ORDER TO MAKE UP FOR
1
SECRET
1
59
See 67
1THG
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