Intervention welcomed

Press, 14 March 1985, Page 30

Intervention welcomed

PA Dunedin Whether the financial market could have continued to function properly given the excessive interest rates prevailing since the dollar float was questionable, Mr Chris Lynskey, chairman of the Finance Houses Association, said. He welcomed Reserve Bank action to ease liquidity pressures in the market, and said he was confident that would successfully reduce rates. “The association has no doubt that the deregulatory moves made to date will result in a more competitive and efficient finance sector of the economy which ultimately will be to the benefit of all New Zealan-

ders,” he said. “It is still not widely understood that after the float domestic liquidity is no longer affected by foreign exchange flows, and that therefore the Government has significantly strengthened its control of domestic liquidity levels. “The assumption of this power carries with it a responsibility to ensure that the financial system has available to it sufficient liquidity to continue func-

tioning efficiently.” Mr Lynskey drew attention to what he considered was a major anomaly in the market, the fact that under the Securities Act trustee banks, trading banks, and building societies were not required to disclose the kind of information required of the members of the FHA. “Investors should have access to this information, and this is best achieved by applying a minimum uniform level of disclosure to all borrowers,” he said.