TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 90

HKK.

230

10017.

SECRET

Cr P

567

Sevety of State (Summery of most of

this head, telegraphed

to you)

FROM R D Clift

Hong Kong Department

DATE :

11 October 1983

Mr Donald

Private Secretary

HUD

cc :

PS/Mr Luce

PS/PUS

Sir I Sinclair

Mr Giffard

Mr Evans

Mr Burrows, Legal Advisers Mr Appleyard, ERD

HONG KONG: PROPOSED FINANCIAL MEASURES

PROBLEM

See

67

1. On 12 October the Governor of Hong Kong proposes to put to the

Executive Council a scheme designed to stabilise the Hong Kong

dollar.

(i) Should the Secretary of State support the Governor

in the event that it is necessary to introduce the scheme in the face of EXCO's opposition?

(ii) Should the Secretary of State approve the Governor's proposal, in this connection, that $250 million should be

transferred from the Exchange Fund to General Revenue Account?

RECOMMENDATION

2.

I recommend that the Secretary of State;

(i) if necessary support the Governor against EXCO. wish to speak to the Chancellor of the Exchequer; (ii) approve the proposed transfer.

He may

A

BACKGROUND

3. The Secretary of State is aware that officials from the Treasury and the Bank of England have been advising the Hong Kong

Government on measures which the latter propose to introduce in order to stabilise the Hong Kong dollar. The Chancellor's Private Secretary wrote to Number 10 Downing Street on 6 October with a

summary report on the proposals, which in the view of Treasury

officials are technically feasible, and stated that the Chancellor

planned not to dissuade the Governor from going ahead.

SECRET

/Mr Turnbull's

Page 90Page 91

B

C

O

E