CODE 18-77
CONFIDENTIAL
Reference
although in the context of their current reserve position it should not be unthinkable.
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15. At JLG XX we explained why Hong Kong could not set aside HK$ 15 billion as the Chinese had requested copy of our telno 1744 attached. The reason that Hong Kong simply could not afford it has somewhat fallen away. I also attach a copy of the Chief Secretary's reply to a LegCo question. This is where the HK$ 120 billion figure comes from.
Sterling Safeguards
6.
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As you note, there are a number of ways that we could take forward the question of sterling safeguards once the policy is resolved. Although Hong Kong HMOCS members would complain vociferously about the proposal in para 10a of your minute, my own view is that this would be "fair" and that we should have no difficulty selling it in this country. With regard to the thought in paragraph 10b, I would look at this as a bit of a wheeze. I wonder whether we could in fact hold the line, should the Hong Kong dollar strenghten significantly. I would of thought that, in time, such a device would come to be looked upon in the same way as the current application of SPOS to HMOCS officers. I would prefer, if going down this road, to stick to a trigger point.
7. I am studying your draft submission on sterling safeguards and will comment shortly.
Mill oftare
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|M V Stone
WH 304
270 2651
21 April 1992
SISACL
CONFIDENTIAL
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