TNAG-1487-FCO40-2044-Hong-Kong-banking-Banking-Bill-1986-1986 — Page 7

ET MON

H M Treasury

EKU

@ Hong Kong Depor

Cercakeful for early draft-

Parliament Street London SW1P 3AG

Switchboard 01-233 3000 Direct Dialling 01-233

4286

Refract

24

21 March, 1986

3

Sir Geoffrey Littler KCB

Second Permanent Secretary

R.Q. Braithwaite, Esq., C.M.G.,

Room WH.237,

WHITEHALL, F.C.O.,

LONDON, SW1.

Drow Rad

HONG KONG

Dla Kangle Tel sat fot

Кара

26/3

Il rise at Comomon's meeting.

You may recall that in 1984 the IMF staff team, which prepares the regular review of developments and short-term prospects in foreign banking and bond markets, visited Hong Kong as part of their international tour. While he was over here, Tim Lankester mentioned that the Fund would now like to send another mission to Hong Kong to review developments in the financial markets.

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2. I appreciate that, following the 1984 Sino-British Agreement, a mission might be thought sensitive. But such a report by the Fund would provide a useful independent assessment about Hong Kong. In particular, we could reasonably hope for a report which emphasized the importance to Hong Kong's economic success of a liberal financial regime. It would in addition be a useful exercise of the Fund's surveillance role over financial markets. As you know Hong Kong's Financial Secretary has regularly attended the IMF/IBRD Annual Meetings in order to keep abreast of developments although there is no formal relationship between the Fund and Hong Kong.

3. We expect this mission to be slightly more wide ranging than previously but there would be no question of any report implying the prospect of a changed relationship between Hong Kong and the Fund. There is, in fact, another precedent for mini consultations with an economy neither a member of the Fund nor intending to be so. Netherlands Antilles, although part of the Netherlands, has had two Article IV consultations since 1983. We would, of course, have to make sure that the Fund kept the Chinese as well as ourselves fully informed of their plans but I am sure the Fund are well aware of the point.

4.

The

I hope you can agree that a further such mission would serve a valuable purpose and that we earn respond positively to the Fund.

HKK101/2

RECEIVED IN REGISTRY

25 MAR 1986

Yours,

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