NEWS SOON ON SWISS LOAN

Press, Volume CVIII, Issue 31809, 14 October 1968, Page 28

NEWS SOON ON SWISS LOAN

(N.Z. Press Association) AUCKLAND, Oct. 13. The Government should know soon how much and when next year it would be able to borrow in the Swiss capital market, the Minister of Finance (Mr Muldoon) said on his return at the weekend from a five-week trip abroad.

The loan, he said, would be medium term to long term. Unlike Australia, New Zealand had not yet been formally included in the borrowing schedule arranged by major Swiss banks, with which he had preliminary negotiations.

Mr Muldoon did not agree that the recent sterling support arrangements meant that Britain had put sterling in the hands of the receivers, to start shedding herself of the role of international banker and defender of sterling as a stable, convertible reserve currency. Britain, he said, had undertaken very considerable obligations to defend the basis of the sterling area, by agreeing to repay if necessary up to SUS2OOOm contributed to the support of sterling. Not in the short run, but in the long run that could impose a considerable additional burden on the British economy. “Meanwhile, however, Britain need have no worry about a further flight from sterling. We and other holders have agreed to keep a certain minimum proportion of our reserves in sterling. It was a two-way deal and quite definitely one to support sterling.

“Most people—and I am one of them—think that if sterling were no longer a reserve currency, British invisible earnings would tend to dwindle, which would be an important blow to the British balance of payments. "German banks and Swiss banks are becoming more important in the capital market because, for the time being, they are the only major source of new surplus capital. But British banks, insurance companies and allied institutions still contribute considerably to British exchange earnings,” Mr Muldoon said. Mr Muldoon said his trade talks in West Germany had been very profitable. Clearly German Ministers were disillusioned and disgruntled with the Common Market agricultural policy, which would be reviewed next year. They were prepared to admit more New Zealand lamb and, as compensation for New Zealand exclusion from the European Economic Community, would also take more cheese from the Dominion. Conversations with the Japanese Prime Minister (Mr Sato) and his Ministers had also been very productive, said Mr Muldoon. He hoped negotiations to revise the Japan-New Zealand bilateral trade agreement would start soon.