TNAG-1271-FCO40-1621-Financial-policy-in-Hong-Kong-1983 — Page 19

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DESKBY 2512OOZ

FM HONG KONG 25100OZ NOV 83

TO IMMEDIATE FCO

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TELEGRAM NUMBER 1830 OF 25 NOVEMBER

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5 DEC 1983

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KERILI

FOLLOWING PERSONAL FOR PUS FROM GOVERNOR. ORIEL: FINANCIMAL CONTINGENCY PLANNING. 1. AS YOU WILL KNOW, THE IMPACT OF THE MEASURES WE TOOK TO STABILISE THE EXCHANGE RATE AND PREVENT FAILURES IN THE BANKING SECTOR HAVE BEEN ENCOURAGING. BUT WE HAVE NOT LOST SIGHT OF THE FACT THAT THIS MS IN PART DUE TO THE MORE OPTIMISTIC ASSESSMENT MN THE PUBLIC MIND OF THE PROGRESS OF THE TALKS: AND IF WE ENTERED ANOTHER PERMOD OF DIFFICULTY CONFIDENCE HERE COULD EVAPORATE QUICKLY AND DRAMATICALLY, WHTH A SUBSTANTIAL IMPACT IN THE FINANCIAL SECTOR.

2. IN GENERAL, WE DOUBT WHETHER THERE IS ANY NOVEL ACTION WHICH. WE COULD TAKE HERE OTHER THAN TO CONTINUE WITH THE POLICIES WE HAVE ALREADY ADOPTED. BUT THE STAKES ARE HIGH ENOUGH THAT WE WOULD LIKE TO ASSURE OURSELVES, BEFORE WE ARE FACED WITH THE SITUATION, THAT THERE IS NOTHING WE HAVE MISSED: AND ALSO TO KNOW WHETHER THERE HS ANY ACTION WHICH HMG COULD AND WOULD TAKE TO ASS EST. WE SHOULD DO THIS WHILE THINGS ARE CALM AND

CONFIDENCE IS HIGH.

3. WT SO HAPPENS THAT OUR SECRETARY FOR MONETARY AFFAIRS, BLYE, WHO HAS BEEN UNDER EXCEEDINGLY HEAVY PRESSURE IN RECENT MONTHS COULD DO WITH A SPOT OF LEAVE. THIS WILL PROVIDE EXCELLENT COVER FOR SOME EXPLORATORY DISCUSSION WITH THE EXPERTS IN LONDON AND HAVE ARRANGED FOR HIM TO VISIT THE UK LEAVING HERE ON DECEMBER 1. b WOULD BE GRATEFUL IF YOU COULD ASK THE PEOPLE IN THE TREASURY AND THE BANK OF ENGLAND WHO ARE NOW EXPERT ON OUR AFFAIRS TO SEE HIM AND TALK THINGS OVER WITH HIM. THERE MIGHT BE MINHTHAL DISCUSSION ON DECEMBER 5 OR 6/AND .... WHITH SOME FURTHER DISCUSSION BEFORE HE RETURNS TO HONG KONG ABOUT DECEMBER 17.

4. AM SURE THE TREASURY AND THE BANK OF ENGLAND AGREE THAT HT

S VERY IMPORTANT THAT WE SHOULD EACH UNDERSTAND THE OTHER'S THINKING AND HOPE THEREFORE THAT THEY WILL BE ABLE TO SEE BLYE ON THE DATES PROPOSED. IMAGINE THAT GEOFF LITTLER, PERETS, KHT MCMAHON AND GOODHART WOULD BE THE KHIND OF PEOPLE HE SHOULD SEE. COULD YOU LET ME KNOW AS SOON AS YOU CAN WHAT MIGHT BE ARRANGED AND WHETHER THOSE CONCERNED MIGHT BE FREE.

YOUDE LIMITED

HDI HKD PS

PSIPUS

SIRJ BULLARD

MRG IFFARD

MRDONALD

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