TNAG-2471-FCO40-3595-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 115

1997.

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5.

Hong Kong would also like to talk to the Chinese about

their proposals for a new liquidity adjustment facility.

There is no political problem here, but both the Bank and

the Treasury would prefer the Hong Kong authorities to await the outcome of the discreet review of their monetary arrangements presently being undertaken by two Bank of

England officials (completion expected end-February) before

reaching conclusions and talking about them to the Chinese.

I agree that we should put this point to Hong Kong.

6.

The final proposed agenda item is the one of most

interest to us: the proposal that Hong Kong should in future

publish some figures about the Exchange Fund. Since the War

Hong Kong has not disclosed the asset size of the Exchange

Fund. Almost all developed countries and NICS do publish

such reserve figures. The IMF urged Hong Kong in 1990 to

give positive consideration to doing so. The Governor,

Financial Secretary and Hong Kong Exchange Fund Advisory Committee have now concluded that the Financial Secretary

should announce in his budget speech in March that the

Government will in future publish an annual summary of the fund's year-end accounts, six months in arrears.

7. The main arguments for and against publication are set out in the attached memorandum prepared for the Exchange Fund Advisory Committee. Disclosure as proposed would increase the accountability of the Financial Secretary

(perhaps particularly desirable after 1997), responding to

public and LegCo pressure for greater transparency; it would

also help demonstrate Hong Kong's financial strength; and demonstrate confidence about Hong Kong's monetary management. The main arguments against disclosure are that

some may be disappointed that the Exchange Fund is not even

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