Change to bank law

Press, 27 October 1977, Page 13

Change to bank law

PA Wellington A bill amending the exchange-control provisions and registration of securities functions of the Reserve Bank, and the membership of the bank’s executive committee. was introduced in Parliament. The Reserve Bank of New Zealand Amendment Bill removes the provision, introduced by the previous Government. for any director of both the Reserve Bank and the Bank of New Zealand to be appointed a member of the executive committee. The Minister of Finance (Mr Muldoon), introducing the bill, said that such an appointment was unnecessary and had inherent dangers because of the conflict of interest which might arise. “Moreover, the appointment of a common director could adversely affect the reputation of the Bank of New Zealand as an independent trading bank competing fairly and evenly with other trading banks,” he said. Mr Muldoon noted that, in fact, no such appointment had ever been made, and suggested that the Labour Government had recognised its error after introducing the provision in 1973. Up-to-date exchange control provisions in the bill stem from changes made in Britain. Mr Muldoon said the opportunity had been taken to correct some weaknesses in the exchange regulations. The term “borrowing money outside New Zealand”

is defined and the Minister of Finance is given the power to determine whether a person is deemed to be ordinarily resident in New Zealand in cases of doubt. The Reserve Bank’s legal powers to inquire into breaches of the Exchange Control Regulations are also strengthened. The bill finally brings the registration of Government stock and loans raised bylocal authorities into the orbit of the Reserve Bank in its role as registrar for public sector securities. Certain stipulations relating to the registration of stock issued by other statu-

tory organisations such as the Housing Corporation are; also brought within the scope of the bank. Changes in the law in this section are largely minor. They include a reduction in the age of infants who may; be registered as the holders of stock from 10 years and over to seven years and I over. Mr Muldoon said this amendment would bring stockholders into line with, holders of inflation-adjusted i bonds and various savings accounts. The Opposition did not; oppose the introduction of the bill.