RESERVE BANK OF NEW ZEALAND

Evening Post, Issue 79, 2 April 1936, Page 11

RESERVE BANK OF NEW ZEALAND

THE AMENDING BILL

BUYING OUT SHAREHOLDERS

POSITION OF THE GOVERNOR

The. Minister's statement was as follows:—

"This Bill amends- the constitution and the'powers' of the.Eeserve Bank.' In other ;words it is a measure to alter the Bank machinery to- make it more suitable and more useful in giving effect to the Government's policy and generally, promoting the welfare of New Zealand. The Bill in itself does not authorise the borrowing 7of any moneys or the ■■• expenditure of any moneys but deals merely, with the banking machinery. .

"First of all in accordance with the Government's policy the'share capital is to be-eliminated and the Bank made entirely a State concern. In effect'the State is to buy out the shareholders who will receive full value for their shares, either in cash, or in Government stock as they prefer. Shareholders will receive £6 5s for each £5 share together with the accrued dividend of 5s per share..

'."The.elimination of share capital inVolves, numerous consequential alterations in the Reserve Bank Act and all .of these will be found in the Bill.

. '■".'The distinction between State direc- < tors and. shareholders' ' directors is abolished, but the present personnel of the board is to be retained, but the ~ directors Mother than the Governor ; and Deputy Governor)' will hold office v during the pleasure of the Governor- ; General, in Council and,'in any, case will '1 retire in rotation. on the same dates | as .fixed in the principal Act. ". ."Future appointments to the board i will be made by the Governor-General ) in. Council. The Governor and Deputy \ Governor however continue in office : ;in accordance with, the terms of the i original appointment i,e., 'for ,a period [of seven years from 1934. Future appointments to the .Governorship will be made on similar' terms, as this part of the original Act is not being ■I amended. FUNCTIONS OF THE BANK. "Concerning the powers of the Bank the. first and most important altera- , I tion. js a restatement. of the ' general ifunptioris of the Bank, which are jwidened and made more specific' To .jthjs end section 12 of the principal Act Jis" repealed and the following declaration of policy substituted for it:— ■ i ' 10. (1) It shallbe the general fiinc•jj ■ tion- of-the Reserve Bank, within the . •',: limits of its powers, to give effect as far as may, be to, the: monetary . ■.;. policy, of the Government, as com- ■■■■; municated to it from time to time by •■' ■ the Minister of Finance. For this

purpefce, and ..to., the,, end that the

■; economic and social welfare of New ( . Zealand may be promoted and.maintained, the Bank shall regulate and -.control .credit and currency in New

Zealand,-the transfer..of moneys to or

; ; from New Zealand, and,the disposal' ■j. of moneys that are derived from, the ■J sale of any New Zealand products

.. ..Details of the Reserve Bank of New Zealand Amendment Bill were given in the House of Representatives'this afternoon by the Minister of Finance (the Hon. W. Nash) on the introduction of the 'Bill by Governor-General's Message. "■". :

and for the time being are held overseas.

• "Power is taken to make regulations to enable the Bank to fulfil its functions as stated, but the extent to which it may be found necessary to use this power depends upon' the course of events. Generally, they are only reserve powers for use in meeting contingencies that may arise.

"Following this the classes of business that may be undertaken by the Banlc have been widened in several directions, trie most important being:

'(a) By removing the present limitation upon the amount of Government securities that may be purchased by the Bank.

(b) By providing on the authority of the Governor-General in Council that;the Bank may underwrite any loan proposed to be raised by the New Zealand Government. (c) .By empowering the Bank to grant accommodation by 'way of overdraft to the Government or to any board or other authority having statutory powers in relation to the" marketing of New Zealand produce for the purpose of financing the purchase and marketing of such produce. (d) By increasing the limit of the amount that may be borrowed from the Bank on the security of Treasury bills to the amount of the revenue or estimated revenue of the Consolidated Fund. The present limitation is one-half of such revenue. ■ "Other clauses provide for the control of sterling' exchange and varia- ; j.tion of trading bank reserves with j, the Reserve Bank. j "These are the principal alterations to be' effected by this Bill. There are other amendments, but they are generally of a minor or machinery nature, which can best be dealt with after honourable members have studied the Bill." ,-. . TO BE PASSED BEFORE EASTER. It'was'intended, said Mr. Savage, that-both-Houses would pass'the Reserve Bank of New Zealand Amendment Bill' and the' Government Railway Amendment; Bill (introduced last night) before the Easter recess.' In order to do this it was proposed' to ask the House to sit tomorrow' from 2.30 •p.m. till midnight, and to sit on Mon-^ day, Tuesday, and Wednesday. On. Wednesday, the House would be asked to observe the ordinary Friday hours, .sitting, from, 10.30 a.m. till 5.30 p.m. Sir.'Savage said'that he did hot anticipate that the debate on'the Address in Reply would interfere with the programme he had mapped out. In ■ any ■casey the Government had a perfect right to. intervene"'-on the Address-in-Reply debate "to" introduce Messages from the Governor-General.