MONEY MARKET.

Auckland Star, Volume LXVIII, Issue 299, 17 December 1937, Page 4

MONEY MARKET.

RESERVE BANK RETURN. HOLIDAY NOTE ISSUE. HIGHER PRODUCE ADVANCES. (By Telegraph—Press Association.) WELLINGTON, Thursday. The Reserve Bank return for the week ended Monday, December 13, was gazetted to-night. The statement is balanced at £25,183,162, or £831,993 more than at the close of the previous week. Hie note issue continues to expand with the seasonal demand for cash currency, | the increase over the week being £409,972. Government deposits are £104,309 higher and those of the trading banks have increased by £249.126. The sterling exchange reserve is £2.58,661 higher in value than it was the week before. Advances to the Dairy Industry Account have risen by £352,609, while those to the State for other purposes are £200.000 higher. Other advances than to the State remain the same at £ 100,000. Th^statement with variations compared with the week before is as follows: — i j I | I

Proportion reserve to notes and other demand liabilities (P-c.) 99.30 72.18 72.563 The discount rate is 2 per cent, but the rate is purely nominal, as the bank haa not so far engaged in the business of discounting bills. Capital was added to general reserve under provisions of the Reserve Bank of New Zealand Amendment Act, 1936. The bank started business on August 1. 1934. The item "Advances to Btate or State undertakings," subdivided into three classes, first appeared on August 17, 1936. The first 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 temporary accommodation granted to the Treasury whether against Treasury bills or otherwise. 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, 1936, has been exercised.

Long-dated Government securities, which can now be held by the bank without limit as to amount, are included under the heading "Investments."

The holding of sterling exchange at £16f'143,588 is £325.000 less than at this time last year. The item. "Advances to the dairy industry," £ 5.040,592, which in the ordinary course will become an addition to the exchange funds, l s £313,000 less.

Now that a second season of the Government control of dairy exports is well under way, a more useful comparison can be made with last year's figures. It will be seen that the items, advances to the dairy industry, sterling exchange and the proportion of reserves to liabilities have not varied to a considerable extent.

BANK OF ENGLAND RETURNS. RISE IN CIRCULATION. (Received 11 n.m.) LONDON, December 16. The Bank of England returns for the week ended December 15, compared with those of laet week and a year ago, are as follows, in million pounds:— ISSUE DEPARTMENT.

Rate of Discount. The Bank of England rate of disccunt is 2 per cent, to which it was reduced on June 30, 1932. from 216 per cent.

LIABILITIES. Variation. £ £ 1. General reserve. 1,500,000 Same ■J. Rank notes 14,374,315 +409,972 3. Demand liabilities— (n» State 4.!)02,074 +104,309 (I)) Hanks 6,4S<i.4.11 +240.126 (c) Other .... 759,264 +02.837 6. Othor liabilities 1G3.07S + 5.74!) Total 2S,1S3,162 +831,993 ASSETS. £ £ 7. Reserve— (a) Gold ...-. 2,801,791 Same (b) Sterling ex. 16,443.588 +258.661 S. Subsidiary coin. 102,336 +621 10. Advunces—(1) Dairy Indus- ,„, try Account 5,040,592 +352,609 (2) For other purposes .. 900,000 +200,000 (3) Other advances .. 100.000 Same 11. Investment .... 2,658 325 Same 13. Other assets ... 78,530 +21,344 Total 28.185,102 +831,993 Proportion of reserve to notes and other demand liabilities, 72.563 per cent (73.89 last week). Three Years Compared. The following table shows the position of the bank's funde at this date for the past three years (in thousands of pounds):— LIABILITIES. 1935. 1936. 1937. Capital 1,000 — — General reserve .. 500 1,500 1,500 Bank notes 10,391 12 007 14 374 Demand liabilities— ' ",*•« (J) State 5 - 055 4 .362 4,902 (b) Bank 8,441 9.644 6.486 * ( •,••■ 424 laa 7S » a. Liabilities in currencies otlwr than New Zealand .. 124 Other liabilities . . Ill 208 163 Total 26,047 28,821 28,185 ASSETS. £ 6 £ Reserve— (a) Gold 2,801 2,802 2 802 (b) Sterling ... 21,464 10,769 16,444 (c) Subsidiary coin 200 116 162 Advances to State— Dairy industry . — 5,354 0,041 Other purposes. — 800 900 Other advances .. — — KjO Investments.. . 1,548 2,701 2 058 Other assets ...... 34 278 79 Total 26,047 28,821 28,185

Dee. Dec Year 15. 8. bro. Notes isstiPd— £ £ £ In circulation .... 501.0 402 S 407 7 In banking- dept. . 44.r> r>3 0 40 0 Other Govt. securities 208.7 208.7 188.7 Other securities 0.3 0.3 0.3 Silver coin Gold coin and bullion 326.4 320.4 313.7 BANKING DEPARTMENT. "est ■ 3.4 3.3 3.3 Deposits— Public 11.4 11.7 10.4 Bunkers' 103.4 106.3 90 2 Other accounts . . 36.5 36.7 38 8 Govt. securities .... 95.0 87.2 8(1.0 Discounts, advances . 7.8 9.6 6 7 Other securities .. . 20.7 20 n O 0 8 Notes and coin 4."i.7 54 8 46 7 "Proportion -, 30.14 35.38 32.09