RESERVE BANK

Ashburton Guardian, Volume 53, Issue 284, 12 September 1933, Page 5

RESERVE BANK

THE NEW ZEALAND PROPOSAL.

APPROVAL BY LONDON PRESS.

DEVELOPING EMPIRE UNITY

(Special to the United Press Association of New Zealand).

(Received This Day, 10.35 a.m.) LONDON, September 11

London papers are generally sympathetic to the proposals to form a reserve bank in New Zealand.

The city editor of the “Evening Standard” writes editorially : “It is evident that New Zealand’s scheme is on sound lines. A central bank which shall act only from economic considerations 'and whose management, will be hound to look only to material welfare of the country is definitely the aim of the Bill. Certainly a central bank, if kept on the lines laid down, would facilitate business between London money markets, and the Dominion. It would also -at times be able- to drive hard bargains with London in regard to financing operations. A welcome detail of the scheme is the limitation of the dividend on shares to a miximum of five per cent.” “The Financial News” welcomes the proposal to reintroduce the Bill and refers to the fact that the Ministei of Finance was careful to point out that the establishment of the bank would not involve surrender by the State of its right to determine the monetary policy, and while that is true in the last resort one of the main objects of the establishment of the Central Bank is to- ensure that expert judgment and not political pressure or sectional selfinterest. shall control monetary policy.

The City Editor of the “Morning Post” is sympathetic to the proposal, but stresses the importance of reserve banks being entirely independent of State control. The “Financial Times” says that criticism has been directed .mainly at the part of the measure designed to •curtail the functions >of trading banks and to the relation of currency and credit policy to that of the Bank of England. The “Times” says that the first of these criticisms has long been met. Regarding the second point, it is evident that there is some difficulty in the minds of criticism distinguishing between co-operation with, and subjection to, the monetary policy of the Mother Country. The establishment of a reserve bank no more implies domination of New Zealand affairs by outside interests than does the linking with sterling of the exchange of certain foreign countries govern the economy of the latter. The article continues in further terms of approval of the proposal as an important development in greater-Empire unity, and concludes: “Necessarily international banking cooperations cannot, be entirely free from political considerations, which is not the same thing as State control.” ,