EXPANSION OF CREDIT.

Auckland Star, Volume LXXII, Issue 88, 15 April 1941, Page 4

EXPANSION OF CREDIT.

AUSTRALIAN BANK DEPOSITS.

NEW £367,700,000 RECORD

A sharp increase in deposits of the nine trading "banks in Australia is disclosed in the March issue of the Commonwealth Banks Statistical Bulletin. Average deposits in February rose by £0,200,000 (Australian) to a new high le\cl of £36/,/00,000, representing an increase over 12 months of £17,200,000.

Advances in February fell bv £1,200 000 from £279,000,000 to £277,800,000. Over 1- months, advances, discounts, etc., have shown little variation. The average figure for February, 1040, was £277,100,000. Over 1- months there has been an increase in .treasury bills and Government securities held by the trading banks from £77,700,000 to £101,000,000. This indicates in some measure the extent to which crcdit is expanding in conformity with abnormal wartime needs, although, of course, not all of this increase in security holdings is directly inflationary.

The considerable increase in deposits is chiefly due to abundance of credit in the Commonwealth caused by wartime exigencies. Increased Government spending in prosecution of the defence programme has inevitably increased purchasing power, and with it bank deposits. In addition, satisfactory returns received op to the present by most primary productn have tended tQ build up deposits. Advances have tended to fall chiefly because there has been less demand for accommodation for imports in consequence of wartime restrictions, while many people, by reason of the increased amount of credit in the community, have been able to liquidate their indebtedness to the bank?.