THE MONEY MARKET.

Auckland Star, Volume LIX, Issue 75, 29 March 1928, Page 11

THE MONEY MARKET.

FRANCE BACK TO GOLD. FRANCE TO RESUME ON MARCH l.j A GREAT RECOVERY. Of 12.000.000 dollars outflow of gold from U.S.A. on February 26. 7..t00,000 dollars was for dispatch to France. This represents a consistent policy adopted by the Bank of France in preparation for the resumption of gold payments in May. It has lone been a matter of conjecture what part tlie foreign credit balances, controlled by the French bank and now amounting to £300,000,000, would play in the resumption.

A little while neo it was commonly believed that no effort would be made to draw gold against them and accumulate additional reserves av Paris, but the bank apparently adopted that policy in earnest two of three months ago and has transferred from other markets to its cvfn vaults between £6.000.000 and £8.000,000. Tt has not yet Geeii formally added to the bank's reserve, but will undoubtedly be thus entered when the franc has been legally revalued: under which circumstances the home gold reserve would be nearlv 50 per cent of the outstanding note circulation, with an immense fund of foreign exchange held in addition. The protection thus provided for the resumption experiment would seem to be complete. lea vine the Bank of France in the strongest technical position of any central banking institution in the world. This is an impressive change from the precarious financial status of 1926 and 1925. when the bank was once induced actually to falsify its public statements in order not to disclose its real position. But sudden and spectacular recuperation of the sort has been a familiar story in French finance after every one of its numerous exhausting wars.