Insurance Against Loss

Hawera Star, Volume LII, 28 January 1933, Page 6

Insurance Against Loss

SAFEGUARD FOR BANKS EXPLANATION OF THE MEASURE WELLINGTON, Jan. 27. The Banks Indemnity (Exchange) Bill at present before Parliament is entitled “ail Act to insure several banks carrying oil the business ot banking in New Zealand against losses they may sustain by reason of the fixation at the request of the Government of the rates of exchange on London and arising from the purchase and sale of exchanges.” The interpretation clause defines the standard exchange rate as the rate for the telegraphic transmission of moneys from New Zealand to London that was in force prior to January 20. The fixed exchange rate is defined as the] rate fixed by the banks alicl in force at the passing of the Act for the telegraphic transmission on moneys from New Zealand to London and includes any rate intermediate between the standard rate and the rate in force at the passing of the Act that may be hereafter fixed by the banks at the request of the Government. Clause 111 constitutes the Bank of New Zealand the agent of the Government for the buying and selling of exchange on London for the purposes of the Bill. The provisions of the Bill insofar as they confer rights or impose obligations .on the banks' carrying on business in New Zealand shall apply with respect to the Bank of New Zealand in its ordinary capacity as they apply to other such banks. Clause IV authorises tliei Banks of New Zealand to buy the whole or any portion of surplus exchange held in London by other banks on application being made by the latter. The Bank of New Zealand as agent of the Government may resell to the banks, says clause V, any exchange acquired bv it under the proposed legislation and shall on application m that''behalf be required to resell to, any bank exchange on London to an. amount not exceeding the amount of exchange puilchased from that bank pursuant to the preceding clause. Clause VI provides that sales of e change to or from the Bank of New Zealand shall be made at the fixed exchange rate subject to such concessions as may be mutually agreed to. Exchange purchased on behalf of the Government, clause VII provides, may be paid for in cash or by Treasury Bills discounted at a rate to be mutually agreed on between the Government and the banks, but not exceeding in any case the rate for the time being fixed by the banks in respect of overdrafts on best accounts. All payments, whether in cash oi by Treasury Bills, required to be made by the Bank of New Zealand may be met by the Minister of Finance out of the consolidated fund. For the purposes of the Bill the Minister may from time to time borrow oil security of Treasury Bills or otherwise .on security of the puibli.c revenues of New Zealand moneys that may be required for payments to be made by the Bank of New Zealand as agent of the Government or may issue Treasury Bills to such an amount as may be necessary -in the payment to any bulk for exchange on London purchased from such bank by the Bank of New Zealand. Clause VIII deals with the investment of exchange purchased on behali of the Government. It is provided that the Minister of Finance or the Bank of New Zealand as agent for the Government may from time to time invest the proceeds of exchange in any securities in which balances ol the public account may be for the time being invested in accordance with the provisions of Section 39 of the Public Revenues Act, and may from time to time sell any securities so purchased. . . If in the opinion of the Minister the proceeds are not otherwise required they may be invested in the purchase of any other securities authorised t>. this section or may he wholly or partly applied in the redemption of any securities charged upon the public revenues of New Zealand. The Minister or the bank as agent mav from time to* time in order to provide funds for purposes of the Bill borrow moneys on security of any securities in which moneys are invested under the proceeding provision and may pledge or hypothecate securities ,by wav of security for sums so borrowed.' All costs, charges and expenses incurred in raising moneys under this section shall without further appropriation be charged to the consolidated fund. . The final clause gives power lor toe making by Order-iu-Council of such mgulations, as may be necessary for giving effect to the proposed legislation.