EXCHANGE RATES

Hawera Star, Volume XLVIII, 3 September 1924, Page 5

EXCHANGE RATES

A CHANGE NEEDED

DIFFICULTIES IN THE WAY

(by TELEGRAPH—PRESS ASSOCIATION.) WELLINGTON, Sept. 2, The exchange oit money question was brought up in the House this afternoon, when Mr W. D. Lysnar (Gisborne) asked the Prime Minister whether he would communicate with the Imperial Government with a view to. inducing them to introduce legislation on the subject of exchange. Mr Massey said the exchange position had been receiving serious attend tion, and at the present time communications were passing between the Go vernment and the Dominion’s representative in London with the object of effecting an improvement-. A return to the gold standard would no doubt result in the disappearance of most of oliti difficulties, but this was not practicable immediately. Mr Massey said the question o,f issuing currency bills was carefully considered by the Imperial Economic Conference m 1923, when it was decided that it was neither necessary nor desirable to adopt complicated nlans for a new instrument of credit such as Empire currency bills, which involved difficult and disputable constitutional financial questions. It was, however, concluded that the position' .could be ameliorated by the establishment of a central bank of issue in this or any other, country, with ample power to effect. and. control exchange operations as_ between its own country or countries with which it principally trades. Phis bank could undertake to issue its notes against sterling or recognised securities such as, British Treasury Bills, and convert them back to sterling at fixed rates by th© method known as exchange standard besides buying and selling sterling for notes. The bank would have nower of rediscounting for other banks, whereby the latter could* replenish their cash. The central hank would also require to control the expansion and contraction of credit as compelled by the trend of exchanges. ‘The whole subject is full of difficulties, but it is not being lost sight of either in this country or any of the countries of the Empire, and any system tending to an improvement will be availed of,” added Mr Massey. Replying to the Leader of the Opposition (Mr T. M. ; Wilford), Mr Massey said he could not tell him what rate of profit the banks were making out of exchange. Mr Wilford said be- understood it was a very high rate.