MONEY MARKET.

Auckland Star, Volume LXIX, Issue 309, 31 December 1938, Page 4

MONEY MARKET.

RESERVE BANK RETURN. ADVANCES UP £872.430. INCREASED STERLING FI NDS. i By Telegraph. - At: n t WK1.1.1 N( JTON. Ki'Miy. The Rese:\«.• Hank tetum t?>,• ended Monday, Domber 26. was i—«ticd to-fldV. Tiie st item nt is ba'juced at £29,481.601.'. ot £i,320.03l im-ie tli.iu a; the close of the previous week. Following the fall of £203.U3U in Uie t.revious f*.-t<!iu. the -terling exchange i eserve h..s t iseii in vaine by £31n.1.>5. Advinces to the State air i-f. 2.430 h.zhcr. £72.430 b»M ng the inm-.isc in produce advances and £SUo.ooo Ml tlio*' lor other purposes. The note issue has again increased. v £342,W to .i toral of t! 1ij.041.H2">. compared with £ 1.V233JJU0 at the corresponding dat 3 la.it year. Government deposits are £209.177 higher and those ot_the trading banks have increased by £,66.008. The statement with variations compared with the week before is as follows: — LIABILITIES. \ a riation £ £ rffvn'e .. 7 .aim.iV>o Sam*Haok notes- 18.>341,625 • 342.8 s -' | Demand liabilities —• _ State 2.542.t'»4 — 2.*u.l»i Banks 7.19 X.227 --TtiO.tjos Other 7:» 100 — ml.tgi.) OrhPr currencies •- I? ».*»!.• Other liabilities .. 205.074 — 9.441 Total 25,4*1,69!> r 1.320.031 ASSETS. £ £ Reserve — Gold 2. SOl. "91 Same Sterling Ex 4.G75.23.3 -311J.13S Subsidiary coin . ■ . 158.6G0 —5.001 Bills 500.00" Same Advances — Marketing 5.237. -72.430 Other 11.200.000 - xoo.ooo Investment 3,605,0'J*J Same Other assets ~ 14-.404 Total 28,481,699 +1.320.031 Proportion of reserve to notes and other demand liabilities. 27.382 per cent (28.100 last week). Three Years Compared. The following table shows the position of the bank's funds at this date for the past- three year# (in thousands of pounds):— LIABILITIES. 1936. 1937. 1938. £ £ £ General reserve 1.500 1.500 1 .500 Bank notes ... 13,642 15.233 16.642 Demand liabilities — State 3.540 3.4*7 2.542 Bank 11.050 5.93" 7.193 Other 236 49* 79 Other currencies —- -0 Other liabilities 134 16!» 2u6 Total .... 30.10S 29.817 28.482 ASSETS. ££ £ ' Reserve— Gold 2.802 2.802 2.50" Sterling 16.534 16.993 4.678 Subsidiary coin 111 210 189 Bills — — J 00 Advances to State— Marketing Department 6.060 6.1 SO 5.257 Other p'rposes 1.800 900 11,200 Investments . . 2.700 2.658 3.605 Other assets -- 101 74 251 Total 30,108 29,817 28.482 Proportion reserve to notes an«f other demand liabilities (p.c.) 67.91 70.82 27.882 Principal Changes. The most important change of the week u the rise in sterling funds, which had previously caused serious concern by tailing persistently. The increase is usnjal at this time of the year when dairy products, wool and meat are exported in large quantities as the production season advances. Against this the rise in advances to Government Departments is another seasonal development, due mainly to the increased dairy production necessitating higher aggregate payments under the guaranteed price scheme. Compared with a year ago note issue is over £1.400,000 higher, while State and bank deposits combined are over £2,000,000 lower. Compared with two year* ago they are about £0,000,000 less. On the acsets side the chief movement is in sterling, which is lower by over £12,000,000.

So detailed information is available hi regard to the item advances for other purpose*, which has risen sharply in recent months and now stands at over £11.200,000. The proportion of reserve to note* and other demand liabilities is over 42 per coat less than the figures ruling a year ago. The discount rate is 4 per cent, to which it was raised from 2 per cent on November 21. Capital was added to general reservt under provisions of the Reserve Bank of Xew Zealand Amendment Act. 1936. The bank started business on August 1, 1934. 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, 1937, the governor of the bank. Mr. Iu Lefeaux. referring to other advances nnder this heading, stated: It ha* 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 procednre will reveal at any time the extent to which the power to grant accommodation to the Treasury nnder section 15 of the Reserve Bank of Xew 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 beading "investments."