MONEY MARKET.

Auckland Star, Volume LXVIII, Issue 310, 31 December 1937, Page 4

MONEY MARKET.

RESERVE BANK RETURN. DAIRY ADVANCES HIGHER. RISE IN STERLING EXCHANGE. (By Telegraph.—Press Association.! . WELLINGTON, Thursday. , The Reserve Bank return for the week ( ended Monday, December 27, was issued t tn-uic'it. The statement is balanced at £20,117,032. or £353,792 more than at the t close of t'ne previous week. A further slight rise in the value of i the note issue. which increased hv ] £ 138.913 to £ 1.V233.127. probably represents the peak of tiic holiday season 11«• in.l n< 1. Government deposits are £ ."> Ui.S56 j lower than the\ were a week before, and ■ those of the trading banks have increased by £858.189, Otiier demand liabilities are ' £125.06."> lower. The sterling eschange reserve has risen In- £ 1 15. Kit) in the week the return covers. Advances to the Dairy Industry , Account are £401 .Ml higher. while the i item, advances other than to the Stat- j or State undertakings, which stood at £1.">0.000 ;he previous week. has dis- . appeared from the balance-sheet. the statement, with variations com- i pared with the week before, » as i follows: — liabilities. Variation. £ £ 1. General reserve. 1,500.000 Same 1 - - Hank notes ... 15.233.127 -4-138913 3. Demand liabilities— (a) State 3.t < 5R.74'i —54fi.850 fb) Banks .... 8.929.644 J-Sss'iso (el Other 4 98.-Jin 1 _i jn;.-, R. Other liabilities. 1H9.313 —l.SSitj' Total 20.517.032 + 353.702 / ASSETS. „„ C £ 7. Reserve.— (a) Gold 2.801.791 Same (b) Sterling Ex. 16,f>02.74S + 115,166 R. Subsidiary coin . 200,661 —2,639 10. Advances— (1) Dairy Industry Account 6.180,312 +401,841 (2) For other purposes . . 900,000 Same (3) ft th e r , advances . — —150.000 11. Investment .... 2,658,325 Same 13. Other assets .. 74,195 —10.556 Total 29.517.032 +353,702 Proportion of reserve to notes and other demand liabilities, 70.323 per cent (.70.808 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. 1935. 1036. 1937. £ £ £ Capital 1,000 — — General reserve .. 500 1,500 1,500 Bank notes 10,721 13,641 15,233 Demand liabilities— (a) State 3.696 3.540 3.487 (b) Bnnks 9,679 11.056 5.930 <r) Other 362 236 49S Other liabilities .. 114 134 169 Total 26.072 30,107 29,817 ASSETS. £ £ £ Reserve — (a) Gold 2.802 2.802 2.802 (b) Sterling ... 21,399 16,534 16,993 (e) Subsl diary coin ...... 196 111 210 Advances to State —■ Dairy Industry . — 6,059 6,180 Other purposes . — 1.800 900 Investments 1,639 2,700 2,658 Other assets 36 101 74 Total 26,07*2 30,107 29,817 Proportion reserve to notes and other demand liabilities _ (p.c.) 98.95 67.91 70.323 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 of the Reserve Bank of New Zealand Amendment Act, 1936. The bank started business on August 1, 1034. The item "Advances to State 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. Id. 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 x 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, 193(5, 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 £10,992.748 is much the same as at this time last year. The item "Advances to the dairy industry," £6,180,312, which in the ordinary course will become an addition to the exchange funds, is just slightly ihigher than a year ago. 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.