CAPITAL FLOW.

Auckland Star, Volume LXV, Issue 57, 8 March 1934, Page 5

CAPITAL FLOW.

EXCHANGE INFLUENCE HINDRANCE TO TRANSFERS. EVIDENCE OF BANKERS. (By Telegraph.—Own Correspondent.) WELLINGTON 1 , this day. In evidence given before the Parliamentary Monetary Committee yesterday t j the Associated Banks, it was stated that the high exchange rate was restricting the transfer of capital from New Zealand to Britain. A question was asked as to the extent of the evidence that importers might be withholding external payments in anticipation of a return of New Zealand currency to its former parities. The answer was that there was evidence that external payments were being retained in New Zealand meanwhile, but so far as the banks were aware not to any considerable extent. Another question was: Is there evidence of the withholding or the accelerating of capital movements from or to New Zealand by reason of current economic conditions or of the rate ot exchange 1 The answer of the banks was that to assist the Government, and at request of the Government, they declined to facilitate the transfer of capital funds from England to New Zealand. As to capital transfers from New £ ea " land, it was clear that the present exchange rate acted as a deterrent. j Money for Investment. Replying to a question as to whether there were any specific improvements in New Zealand's monetary policy that could be suggested by the banks as desirable from the viewpoint of restoring and maintaining general prospei ltj, it was stated that the present conditions in New Zealand were due to woild conditions outside the control of this country: specifically —a fall in prices i for rmr in. -#e EM®

that produce was sold —and the banks emphatically considered that prosperity could not be achieved by monetary manipulation. It is not the present banking policy to restrict financial accommodation, and, moreover, the amount of demand deposits in the trading banks and savings banks alone aggregated over £70,000,000 at the end of 1933. The fact that money was available for good investments was evidenced by the response to the Keserve Bank issue, and by the premium already attaching to Reserve Bank shares.