INTERNAL BILLS MARKET

Press, Volume LXXII, Issue 21807, 12 June 1936, Page 13

INTERNAL BILLS MARKET

Reserve Bank Opinion

ENCOURAGEMENT GIVEN

[From Our Parliamentary Reporter!

WELLINGTON. June 11

An exhaustive survey of the use of bills of exchange is made in the annual report of the beard of directors of the Reserve Bank of New Zealand. which was presented to the House of Representatives to-day by the Minister for Finance, the Hon. W. Nash. The bpard says that the question required to be viewed from various angles, and observes that the history of bills of exchange lias not been completely unchequered in some countries. Although the bill market was a useful adjunct to the financial structure of any country, it was not desirable to attempt to force the use cf bills upon the trading community, unless this means of financing transactions could be proved to offer advantages over alternative methods. “A bill market implies, of course, the existence not only of bills, but also of a group oi persons or corporations prepared to deal freely in them,” states the report. “Whilst such a market in New Zealand may be regarded as a highly desirable objective, its complete establishment does not appear to be capable of immediate realisation. Nevertheless, the board is of opinion that all practicable steps should be taken to promote such development, and that the proper use of bills should be encouraged as much as possible. “In reducing its rate of discount to a level considerably below that quoted by the trading banks for overdrafts, one object of the board was to create conditions in which producers, manufacturers, and merchants would have the opportunity of testing whether the balance of advantage for them lies in a use of bills discountable at a relatively low rate, or in the more flexible overdraft at a higher rate. “In recent years, the use of Treasury bills has been extended very considerably in many countries, and it is not unusual for such instruments to form the major part of the contents of the portfolios of dealers in bills in those countries. Treasury bills provide a useful and economical means of financing expenditure of a temporary nature, and the board is of the opinion that recourse to this means of borrowing, if kept within reasonable bounds, would not only be convenient and economical for the State, but would in addition assist in the development of a bill market, thereby facilitating control of credit in the Dominion. It is, however, considered that the issue of Treasury bills should ordinarily be restricted to such an extent as is necessary to cover expenditure 'incurred during certain periods of the year in anticipation of revenue or other receipts to be received later, and to such further strictly limited amount only as can be kept outstanding without risk to the financial structure. Recourse to the issue of additional Treasury bills may become a practical necessity in certain circumstances, and it is therefore regarded as most desirable that latitude should ordinarily be allowed for an increased issue to meet an emergency.”

WEEKLY RETURN ASSETS AND LIABILITIES u-aess association tileosam.) WELLINGTON, June 11. A Gazette issued to-night contains the following statement of the assets and liabilities of the Reserve Bank of New Zealand as at the close of business on June 8: LIABILITIES

Total .. 28,764*536 14 9 Proportipn of reserve (No. 7 less No. 5) to notes and other demand liabilities, .96.715 per cent. WHOLESALE PRICE INDEX (BUTISJI OttlClAL WIBILMS.) RUGBY, June 10. The Board of Trade index shows that the wholesale prices for May were at the same level as in the previous month, but had increased 4.1 per cent over May last year.

THE METALS MARKET

(1) Genera] Reserve £ s. d. Fund .. 1.500,000 0 0 (2) Bank notes 10.018.770 10 0 (3) Demand liabilities— (a) State 9,745,831 8 7 (b) Banks 7,324,020 15 9 (c) Other 93,830 6 2 (4/ Time deposits .. (5) Liabilities in currencies other than New Zealand currency (6) Other liabilities 82,083 14 3 Total 28,764,536 14 9 » ASSETS (71 Reserve— (a) Gold (b) Sterling ex2.801,733 0 0 change 23,487,819 3 2 (c) Gold exchange — (8) Subsidiary coin .. (9) Discounts — (a) Commercial and 200,647 6 9 agricultural bills (b) Treasury and — local body bills (10) Advances— (a) To State or State undertakings (b) To other public — authorities , (c) Other (11) Investments 2,014,967 0 3 (12) Bank buildings (13) Other assets 259,370 4 7

(BRITISH OmCUL WIRELESS.) RUGBY, June 10. June 9. June 10. CopperStandard Spot £ s 36 5 d. 7i £ s. d. 36 1 lOi Forward 36 11 104 36 8 U Electrolytic .. 40 10 0 40 7 6 to 40 12 6 40 10 0 Wire bars 40 12 6 40 10 0 LeadSpot 15 10 0 15 6 3 Forward 15 10 0 15 8 9 SpelterSpot .. 14 2 6 14 2 6 forward 14 7 6 14 7 6 1%'Spot 184 15 0 183 12 6 Forward 182 10 0 181 12 6 Silver— s Fine, per oz. 19Jd 19*d Standard, per • oz. 21 7-16d 21 7-16d I