‘Heavy Strain On Trading Banks’

Press, Volume CIV, Issue 30937, 18 December 1965, Page 20

‘Heavy Strain On Trading Banks’

(N.Z. Press Association—Copyright? SYDNEY, Dec. 17. In spite of a fall in export receipts, New Zealand business activity held throughout the year at levels which imposed a heavy strain on resources, the president of the aßnk of New South Wales (Mr John Cadawallader) said at the ordinary general meeting today.

"To alleviate this pressure, the Government introduced a series of measures designed to curtail private spending and investment Government expenditure, however, continues to grow. In consequence, the easing of pressures, while perceptible, has been too slow to avoid the emergence of serious excess demand for labour, or to forestall the need for substantial overseas borrowing to maintain external operating reserves. Broader Front "Action has been taken, however, on a broader front than in previous periods of overcommitment Restraint of bank lending, after a sharp increase in trading bank advances in the first few months of 1965, is again the principal medium,” said Mr Cadwallader. “New measures, designed to augment the Government’s

cash surplus over the coming year, will further reduce the bank’s cash to such an extent that special measures, in the form of Reserve Bank or Treasury deposits with the trading banks, will probably be needed to sustain bankers* working cash balances through the lean period from March to June, said Mr Cadwallader.

“In other respects, the last year has been encouraging. The more enlightened policy which permitted opening of the private savings banks a year ago has prompted two further developments. One was the granting of permission to the banks to participate as minority shareholders in hire purchase finance houses. The other, and more important deevlopment, was the qualified permission for trading banks to resume investment in Government securities after a lapse of 25 years.”