TNAG-2515-FCO40-3669-Future-of-Hong-Kong-International-Rights-and-Obligations-Sub-1992 — Page 46

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MDHIAN 6797

ARGUE THAT THE BANK SHOULD CONTINUE TO CONSIDER HONG KONG FOR BORROWING ON EXACTLY THE SAME BASIS POST-1997 AS IT DOES NOW. SHE ALSO RECOGNISED THE DANGERS OF THE BANK BEING SEEN TO CHANGE ITS ATTITUDE TO THE HONG KONG CAPITAL MARKET SIMPLY AS A RESULT OF THE CHANGE IN SOVEREIGNTY.

4.

HOWEVER, MS EINHORN CONSIDERED ARGUMENTS ABOUT THE DEVELOPMENTAL BENEFITS FOR HONG KONG AND CHINA OF SUCH BORROWING (PARA 4CD) OF TELNO 2581) TO BE LESS HELPFUL. OTHER COUNTRIES SOMETIMES PRESSED THE BANK TO BORROW IN THEIR DOMESTIC CAPITAL MARKETS FOR DEVELOPMENTAL RATHER THAN PURELY FINANCIAL REASONS. THE BANK HAD STRONGLY RESISTED THIS PRESSURE.

COMMENT 5.

SO FAR, SO GOOD. IN ADDITION TO SENDING A NOTE I WILL FOLLOW THIS UP DIRECTLY WITH STERN (MANAGING DIRECTOR).

PERETZ

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ΜΑΙΝ

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MONETARY

HKD

PS/MR GOODLAND

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DISTRIBUTION

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SIR J COLES

MR HUM

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