CHANGES SIGNIFICANT

Evening Post, Volume CXVI, Issue 96, 20 October 1933, Page 10

CHANGES SIGNIFICANT

(By Telegraph.)

(Special to the "Evening Post.")

AUCKLAND, This Day.

The "New Zealand Herald" in the bourse of • a column editorial on the tleserve Bank Bill says: "Though it May be claimed, as the Government did in advance, that the principles of the measure are the same, the changes in detail are sufficient to alter very materially the way in which it is regarded. Of the new features one which leaps c • ' Jfco the eye is the enlargement of the directorate,' the incorporation in.it of three Government nominees as well as the Secretary to' the Treasury, who will belong ex officio, an associate without ft vote. There was a cast-iron requirement in all that was said preliminary to the legislating for a Central Bank. It was that there should be entire freedom from the suspicion as well as the fact of political influence in its workings. The fact of such freedom may be preserved, but the appearance of it will be difficult to maintain with a directorate as now to be constituted. This change is evidently an attempt to compromise with the forces of the opposition to the Eeserve Bank proposal us originally produced. The more Rinbitious directorate is certain to make the administration more cumberBorne, as it will make it more expensive. It may even, reduce control of the bank.by the directorate.

"It' is notable that having thus etrengfchened the directorate numerically and almost certainly weakened it in every other way the Bill proposes to widen the powers of the bank in several very important directions. For example, the ratio of reserve to liabilities, a crucial point in banking practice, has been reduced from 30 per cent, to 25 per cent. "Coupled with the enlarged and altered directorate it is significant that the amount of temporary financial accommodation the Government can be granted has been increased from onethird' to one-half of the estimated revenue for the year. Again, while last year's Bill required that ultimately the rate of overseas exchange should be maintained within 30s per cent, of parity with sterling that restriction has been ewept away. It is quite obvious that the Government has been influenced by' the clamour of those critics who would have none of the Eeserve Bank as previously designed. The enlarged board, with its State nominees, is a palpable answer to the assertions that the national fortunes were being given into the hands of a privately-controlled institution. The country may yet have to consider if this Bill goes through in its present form how far its interests are being committed to a po-litically-influenced institution."