TNAG-1270-FCO40-1620-Financial-policy-in-Hong-Kong-1983 — Page 95

Mr. Hum

Mr Donald

Private Secretary

Telegram. Fined

SECRET

Passages in square brackets

to be left out

FROM R D Clift

Hong Kong Department

DATE 11 October 1983

:

cc :

PS/Mr Luce

PS/PUS

Sir I Sinclair

Mr Giffard

Mr Evans

Mr Burrows, Legal Advisers Mr Appleyard, ERD

A

Following Personal for PS..

SUBMISSION B

IHONG KONG

DEPARTMENT.

HONG KONG : PROPOSED FINANCIAL MEASURES SURMARY OF

PROBLEM

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.

BACKGROUND

of the background.

He may

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 te dissuade the Governor from going ahead.

the proposed)

Sought to

SECRET

/Mr Turnbull's