TNAG-2425-FCO40-3527-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1992 — Page 69

CONCLUSIONS

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11.

15.

debt

The original idea of a scheme funded by the issue of

securities, backed by the future flow of lump sum

payments is technically feasible, but cannot be implemented

until a market for long term fixed rate Hong Kong dollar debt

instruments develops. The Hong Kong Government has the

ability in the longer term to create

drafting the new pensions legislation

such a market by

SO as to require

private sector pension funds to keep 50% of their assets in

Hong Kong dollars. Even if the Hong Kong Government does not

do this, some appetite will develop in due course for the

instruments which would be issued to fund the scheme, but it

impossible to quantify the demand and the timescale is

is

some years away.

16.

As a temporary measure, it might be possible to

implement the original scheme, but with the borrowing done on

a floating rate basis or in another currency. Either of

these would require support from the Hong Kong Government,

would be very complex, and

might still not prevent scheme

form being wound up soon after inception.

17.

Instead of seeking to issue securities backed by the

stream of future lump sum payments, it might be possible to

for institutions with large Hong Kong dollar deposits

arrange

to purchase the receivables at a discounted value.

/....