CENTRAL BANK

Manawatu Standard, Volume LII, Issue 260, 3 October 1932, Page 7

CENTRAL BANK

PROPOSAL FOR NEW ZEALAND. CRITICISM IN ENGLAND. DIFFICULTIES OUTLINED. (United Press Association —By Electric Telegraph.—Copyright.) Received October 3, 8.30 a.m. LONDON, Oct. 2. A Sun service message says that city people criticiso the proposal to establish a New Zealand Central Bank and consider that the absence of an international monetary standard makes it inopportune. They contend that, owing to the smallness of the population and the lack of an organised money market, New Zealand has no urgent, need for a Central Bank, and that it will bo difficult to control exchange and manage currency when it is not definitely known what the currency backing will be. The taking over of the gold holdings of the local banks will involve a controversy as they will not sell on the basis of the Bank of England’s statutory price when they can obtain more in the open market.

A messago from the “Standard’s” correspondent at Wellington a few days ago stated that special legislation will be introduced during the present session to provide for the establishment of a Central Reserve Bank in New Zealand. The Prime Minister (Mr Forbes) said that, with modifications as the result both of inquiries made by Mr Coates at Ottawa and by Sir Downio Stewart iy England, legislation would bo introduced giving effect to tho general recommendations of Sir Otto Nicmeyer, whoso report on the subject had boon receiving the consideration of tho Government for some time. A recommendation made by Sir Ottto Niemeyer in his special report on “Banking and Currency in Now Zealand,” was that there should bo a Central Reserve Bank established in New Zealand with , the sole right of note issue in tho Dominion. Shares for the Central Reserve Bank would bo open to public subscription, Mr Forbes added, and the Bank would also bold the reserves of tho Government of New Zealand.