CONFIDENTIAL
N
which mature after 1997. If however you were to feel that before you proceed you needed to sound out the Chinese Executive Director informally, I would have no difficulty in your SO doing. We have reason to believe
he would be
of supportive
the continuation of the Bank's bond issues in Hong Kong, which will not only enable the Bank to retain a useful source of funding, but also
in the further assist development of Hong Kong's capital market.
that
Оп the Bank's policy not to borrow from a borrower of the Bank, I believe you will have by now studied the Joint Declaration and the Basic Law which we passed to you at our meeting. I am sure you will have noted that after 1997 Hong Kong will maintain its present monetary and financial
which is system, separate from that of the PRC. The Hong Kong Special Administrative
Government will decide its
its monetary
on policies Furthermore, the convertibility of the Hong Kong present policy of no exchange control and flow of capital after
Region financial and
dollar, the
the
free
guaranteed.
We
own.
1997
are all therefore, why
a to
rapidly
would see no reason, the Bank should deny itself access expanding financial market like Hong Kong which will remain entirely distinct from the PRC market.
If the Bank is prepared to adopt a more flexible approach by treating Hong Kong as a special case under its borrowing policy, the way is clear for the Bank Co launch bond issues which mature after
1997.
In this connection, you may wish to be aware that the Asian Development Bank has been considering the possibility of issuing bonds in Hong Kong which mature after 1997. We understand that the Treasurer of ADB recently broached the question with the Chinese Executive Director at the ADB, and the response received was that China would warmly welcome such bond issues by the Bank.
The ADB is now considering issue in Hong Kong next year to coincide with Hong Kong's hosting of the Twenty-fifth Annual Meeting of the ADB Board of Governors in May
launching
1992.
bond a
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