NOTE ISSUE RIGHT

Hawke's Bay Tribune, Volume XXV, Issue 152, 14 June 1935, Page 11

NOTE ISSUE RIGHT

Handing Over to Reserve Bank BANK OF N.Z.’s POSITION (By Telegraph—Special to "Tribune.”) WELLINGTON, June 14. Tho issue of bank notes in Now Zealand and the tax levied on the trading banks are referred to by Mr William Watson, chairman of directors oi the Bank of Now Zealand, in his annual report presented to-day to the annual meeting of proprietors. After stating that tho notes in circulation amounted to £503,778 10/-, as compared with £4,259,149 at March 31. 1934, Mr Watson said: "For a number of years the rate the banks paid for the right of note issue was 3 per cent, per annum on, their notes outstanding as calculated from week to week, but five years ago the rate was raised to 44 per cent., which, with the costs of the notes and expenses in connection with them, left little or no profit to the banks. On August 1 last the Reserve Bank exercised its sole right to issue notes in the Dominion, but until August 1, 1936, the trading banks will continue to pay the tax on their unredeemed notes, after which date each bank will pay over to the Reserve Bank the face value of its notes outstanding and cease to pay further tax.

"Large quantities of notes on which tax is now being paid have been destroyed in various ways, and while the trading banks will pay the full face values of these to the Reserve Bank, that bank will, of course, never be called upon to repay the losers. "At March 31, 1934, the trading banks’ notes in circulation amounted to approximately £6,200,000; on. the corresponding date this year they had been reduced to about £850,000, while the notes issued by the Reserve Bank totalled over £9,300,000. The larger amount is accounted for by the fact that the trading banks have to purchase Reserve Bank notes for till money. Our average holding for this purpose is well over £2,000,000.”