EXCHANGE CREDIT POOL

Hokitika Guardian, 6 January 1932, Page 2

EXCHANGE CREDIT POOL

FUNDS IN LONDON. REQUIREMENTS' FOR YEAR. WELLINGTON, January 4. Approximately £14,000,0.0 will be required during the present calendar year out of the recently established exchange credit pool to meet Government and local body interest charges overseas. This sum includes £8.000,000 in respect of interest on Government loans, £4,000,000 for the redemption of Treasury hills falling due next June, and between £1,500,000 and £2.000,000 l'or interest on local botty loaus. Under tile Government’s scheme tor the conservation of exchange credits, exporters are required, as from last i' rjday, to take out licenses for all goods proposed to be sent overseas for sale. The banks hove agreed to pool their exchange reources so- us to- be in a position to meet- the Government’s requirements, the object being to bring all exchange credits arising from the sale of expoits into the pool. The Government and local bodies will have first call on the pool for the meeting of overseas requirements, thus doing away with the necessity of overseas borrowing to meet interest charges. IMPORTANT’ CONSIDERATIONS. Important considerations are raised concerning the operation of the scheme, and exporters and importers are vitally affected by the regulations which have been issued. The requirements by the Government are fairly accurately determined, and £12,000,000 has been set down as the amount needed to meet interest charges and redeem £4.000,000 worth of Treasury bills in London. The same certainty does not exist as far as local bodies are concerned. The Government will .not have to make a call <j n the pool for the repayment of capital; but it is not known whether any local bodies will have to meet these charges in addition to interest. At the moment it is impossible to say exactly what the local body requirements will be; buit the sum is estimated in official circles to he between £1,500,000 and £2,000,000 upon the sale of the goods mentioned in the license. The proceeds must be paid into the head office in London, or, elsewhere, the hank through which the exporter is dealing, /to be remitted to New Zealand at the current rate of exchange. '

A QUESTION RAISED. The question has been raised whether arrangements will be made to enable exporters to make payments in London before the proceeds are remitted to the Dominion. It is officially explained that this Is a question for settlement between the exporters and the bank nominated in their application for an export license. When an exporter applies for a license, he is required to nominaie the bank through which he will pass his documents. Exchange credit- will accrue to that -bank, and out of that the Government requirements are made the first call. The qisposnl of the balance will be a matter for the hank. It is stated thaff as far as the exporter is concerned, there is no doubt that satisfactory arrangements can be made to meet his requirements. There also arises a question regarding the operation of thp regulations in the case of a company that is both an exporter and in importer, particularly a company registered in Britain, which has to make payments in London for tne purchase of materials, for British taxation, and for dividends and other expenses- It appears from the regulations that the total proceeds will have to be remitted to New Zealand, and that in order to make payments in London funds will have to ho remit tart from the Dominion. However, it is stated that although all exchange w ?- oruing is to be passed through the banks, it will be possible for arrangements to be made between the bank and the firm concerned, for the meeting of London requirements regarding the rate at which the banks will remit funds to New Zealand.

ANOTHER QUERY. The question has been asked “Whether exporters will have to accept £IOB 10c per £IOO, London (sight bills), or will they gdfc £lO9 12s tid, the London selling rate for XT'.” As a matter of fact, the rates quoted in the banks, London on New Zealand, on a basis of £IOO London, are Telegraphic transfers, £lO9 12s 6cl; sight bills, £llO.

The cliajrman of the Associated Banks states, in reply /to the question, that the banks will remit funds from London at the current rates ruling the.e at the time of remittance. If ■the b ll is negotiated in New Zealand, the rate is lower, because the fuiicrs are mad n available at the time of shipment, and the bank is not reimbursed in London until payment of the bill is made in London. Interest has also centred upon ffhe question whether licenses will be required for parcerspost exportations. Speaking generally no license will he necessary. The value of goods sent, abroad by parcels post, apart from gold shipments, is stated to he relatively small, so that only gold shipments through this medium will need to he licensed, although the provision is made whereby reconsideration may be given in instances where the circumstances point to tho necessity ol a license being obtained. —T