TNAG-2471-FCO40-3595-Confidential-talks-between-the-UK-and-China-regarding-financ-1992 — Page 152

CONFIDENTIAL

Press Statement

Annex II

Following

the

announcement by the Financial

Secretary (in his Budget Speech on

] of the Government's intention to provide greater transparency with regard to the Exchange Fund, the office of the Exchange Fund today published a summary of the Fund's year-end accounts from 1986 to 1990. The total assets of the Exchange Fund grew from [$

] billion in 1986 to [$

] billion in 1990, representing an increase

of [ surplus, and the unrealised exchange and investment gains together amounted to [$ 1 billion at the end of 1990, an increase of [ 1% from the end of 1986.

2.

13. The accumulated investment

At the end of 1990, total foreign currency assets held by the Exchange Fund (the "international reserves") amounted to [·

3.

1.

Commenting on the

figures

disclosed,

the

tends

time,

[FS/SMA/DEF] drew attention to the fact that the amount of unrealised exchange and investment gains to fluctuate, sometimes substantially, over particularly during periods when interest rates and exchange cates of the major currencies are He also said that if there was a need to

reserves for budgetary purposes,

volatile.

draw on the fiscal

those reserves which had been transferred to the

would fall, but this would not affect

Exchange Fund

the amount of net assets of the Exchange Fund.

CONFIDENTIAL

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