MONEY MARKET.

Auckland Star, Volume LXVIII, Issue 251, 22 October 1937, Page 4

MONEY MARKET.

RESERVE SANK RETURN.

DROP IN STATE DEPOSITS.

BAXKS' HOLDINGS KISK.

(By Telegraph.—Press AssociatiiTi.) ELLINGTON, Thursday. The Reserve Bank return for the weekended Monday. October IS. was gazetted to-night, i lie statement is balanced at -t"2i.813.707. or -L' 203.4.1.") more lhau at Unclose of the previous week. Deposits of the trading hanks have j increased l>y £234.09.>. while those ot the State are £103.040 lower than in the last, previous return. Other demand liabilities are Irtfher by £122.883. while there has lx-cn an increase of £36.107 in tlie total of the note issue. I he sterling exchange reserve has risen £141,840 in value ill the week the return covers. Advances to the Dairy Industry Account are £172,108 higher. The statement, with variations compared with the week before, is as follows: — LIABILITIES. Variation. ! e £ 1. General reserve. 1,.*00,000 Same I*. Bank notes ... 13.117.220 + 30,107 3. I>eman<l liabilities — (a I State 5.130.005 —103.nl!) (h) Banks 7.102.23K +234.n0r, | (c) Other .">.">1.170 4-122.55.3 | fi. Other liabilities. 142.555 -f3.329 1 Total 27.543.797 + 293.455 ASSETS. __ £ £ 7. Rps^rve—(a) Gold 2,801,791 Same < t>) Sterling ex. 17,709.272 +141,540 8. Subsidiary coin . 88,343 —4,202 10. Advances— I (1) Dairy Industry Account. 3,778.987 +172, Ins (2) For other purposes . . . 500.000 Same 11. Investment .... 2,000.451) Same 13. Other assets ... .">8.954 —lti.uoi Total 27,843.797 + 293.455 Proportion of reserve to notes and other demand liabilities, 78.282 per cent (78.61 1 last week). Three Years Compared. The following table shows the position of the bank's funds at this date for the past three years (in thousands of pounds): — LIABILITIES. 1035. 1036. 1937. £ £ £ Capital 51)0 — - - General reserve .. 1,000 1.."> 00 I,siin Bank notes 8,958 11,331 13,117 Demand liabilities— (a) State 5.703 3.839 5.131 (bt Bank 4.752 7.784 7,4n_'| (<•> other 7IT 318 551 Other liabilities .. 93 1"9 143 Total *. 21.813 24,5 M 27,843 ASSETS. I £ £ £ Reserve—(a) Gold 2.802 2.502 2,802 (h) Sterling ... 17.259 Hi,343 17,709 (c) Subsl diary | coin 215 105 88 Advances to State—Dairy industry . — 2.4 17 3.77(1 I iltlu-r purposes . — 700 ,">OO I Investment* 1,515 2,180 2,01 Mi i Other assets 22 08 59 j Total 21,813 24,881 27,813 j Proportion reserve to not es ami ot her demand liabilities tp.e. I 99.21 83.12 78,21*2 The discount rate is 2 per cent, but the rate is purely nominal, as the bank has not so far engaged in the business of discounting bills. Capital was added to general reserve under provisions ot the Reserve Bank of New Zealand Amendment Act, 1936. Tho bank started business on August 1, 1034. The item "Advances to State or State undertakings," subdivided into three classes, first appeared on August 17. 1030. The tiret covers the dairy industry. In his report to Parliament on September 28 the governor of the bank, Mr. L. Lefeaux, referring to other advances under this heading stated: It has been decided to include under the heading of discounts only such bills as are discounted for third parties, and to show as "Advances to the State" any temporal y accommodation granted to the Treasury whether against Treasury bills or otheiI wise. This procedure will reveal at any time the extent to which the power to grant accommodation to the Treasury under section 15 of the Reserve Bank of New Zealand Amendment Act, 1036, has been exercised. Long-dated Government securities, which can now be held by the bank without. limit as to amount, ore included under the heading "Investments." The holding of sterling exchange at £17.700.272 is £1.163.000 more than at thi.~ time last year. Moreover, th" item "Advances to the dairy industry." £3.778.087 in the ordinary course will liecome an addition to the exchange funds. This is one of several factors in the apparent decrease in the proportion of reserve to liabilities. BANK OF ENGLAND RETURNS. TUBLIC DEPOSITS INCREASE. LOXDOX. Octoljer 21. The Bank of England returns for the j week ended October 20, compared with those of last week and a year ago, are as follows, in million pounds: — ISSCE DEPARTMENT. Oct. Oct. Year 20. 13. a jo. i: £ i; Notes Issued — In circulation .... 481.3 489.9 440.4 In b-inkin? dept. . 4\M 30 5 02.3 Other Govt, securities 188.4 247.2 other securities ... n.o 0.0 7c, Silver coin (I •> Gold coin and bullion 320.4 320.4 248^7 BANKING DEPARTMENT. 3.1 a.i 31 1 >oposifs—• Public 29.8 20.1 31.0 Bankers 89.3 92.9 82.2 Other accounts ... 30.3 .'Hi.4 41.3 | Govt, securities .... 99.0 105.1 8n.4 Discounts, advances . 0.4 9.3 9.0 Notes arid coin 23.3 20.4 03.3 | Other securities ... 43.7 38.2 19.1 "Proportion" 28.13 24.03 40.88 Rate of Dlsoount. The Bank of England rate of discount is 2 per cent, to which it was reduced on .Tune 30, 1932, from 2Vi per cent.