TURN FOR BETTER

Evening Star, Issue 21639, 7 February 1934, Page 5

TURN FOR BETTER

EFFECT OF WOOL PRICES AUSTRALIAN FINANCES The view that while the policy of the Commonwealth Bank is agreeable to the private banks in Australia there is not likely to bo any disturbance of the existing arrangement was expressed in an interview with the Wellington ‘ Post ’ by Mr M. P. Duffy, a member of the Commonwealth Bank Board.

Mr Duffy was asked if Australia was likely to follow the lead of other countries in the British Empire and establish a central reserve bank. Mr Duffy replied that the Commonwealth Bank was acting as a central bank to»day. The bank’s constitution was such that it enabled it to function as a central bank. ■ and other banking institutions were at present co-operating to that end.. The constitution of the bank differed from that provided for in the recent legislation passed in New Zealand in so far as the deposits of the trading banks with the Commonwealth Bank were on a voluntary basis, whereas under the New Zealand legislation it was compulsory for a percentage of the reserves to be deposited with the central institution. “This difference in structure,” said Mr Duffy, “ might not have an actual difference in working, for, while the policy of the Commonwealth Bank is agreeable to the private banks there is not likely to be any disturbance of the present arrangement. The Commonwealth Bank, therefore, is to all intents and purposes a central bank.

It was suggested to Mr Duffy that the Commonwealth Bank had played an important part in helping to place Australian finances on a. sound basis. “The board has been given considerable credit for the part it has taken in the rehabilitation of Australia’s financial position,” said Mr Duffy, “but one would rather say that the rehabilitation lias taken place through the good sense of all concerned instead of being attributable to one section.” Dealing with Australia’s economic position generally, Mr Duffy said that the position had taken a turn for the better, and he would say that the greater feeling of confidence that was evident was due mainly to the healthy tone of the wool market. Present indications were that the wool clip would mean an additional £16,000,000 of income for tlie current year, and that in turn must have its effect in improving internal trade. “Of course.” said Mr Duffy, “the position is by no means free from possible . difficulties, as - the international situation has not yet cleared, and every country, including Australia and New Zealand, must experience some uncertainty while this condition remains. While the Commonwealth Government has been able to bridge its deficit, and even show a surplus of revenue, the various State Governments, which are just as important in the financial fabric of the Commonwealth, have still considerable leeway to make up.”