N. ZEALAND CENTRAL BANK

Greymouth Evening Star, 6 May 1931, Page 5

N. ZEALAND CENTRAL BANK

SIR 0. NIEMEYER’S PROPOSAL TO MONOPOLISE NOTE ISSUE [per press association.] WELLINGTON, May 5. The establishment of a Central Bank to control New Zealand’s credit is the chief recommendation made by Sii- Otto Niemeyer, -sho recently investigated the banking, z currency, and exchange problems of the Dominion, whose report has arrived from England. By this proposal Sir Otto Niemeyer recommends that the whole fabric of New Zealand banking should be recast. and that important departures from the present banking practice should be made. Should this action be taken, it is likely that a new institution, in conformity with the functions of other central banks, would assume the sole right of the issue of paper currency in the Dominion. It would be free from political control, and from the dominance of the present commercial banks. Sir Otto suggests that New Zealand should fall into line with other’ countries in order that the control of credit may. be stabilised. Several other important recommendations • concerning currency and exchange are made by Sir Otto Niemeyer, but these are mostly of a machinery character. The whole report will shortly be considered by Cabinet.

SAVINGS BANK DEPOSITS.

WELLINGTON, May 6. A proposal that the Post Office Savings Bank should receive unlimited amounts was recently made to the Prime Minister by the New Zealand Farmers’ Union. To-day, Mr Forbes replied that the proposal would practically mean turning the bank into a commercial bank, entailing a radical alteration in the forms of investment of the banks funds. Short-term commercial deposits could not safely be invested in long-term investments, and that class X>f 'deposit be of little use to the Government,' which was unable to agrpe to an increase in the present maximum amount of £2OOO on which interest was payable. Regarding the increased book-keep-ing charges imposed by the banks, Mr Forbes said that this was to offset the additional amount of the note tax. which had been increased from three to 4i per cent. It was understood that the banks did not propose to pass on the additional income tax imposed. Nevertheless, Mr Forbes said he thought that the banks might all have refrained from increasing, their charge for keeping accounts, especially at the present time. He suggested that the Farmers’ Union should discuss the matter'With the banks.