THE RESERVE BANK

Manawatu Standard, Volume LIII, Issue 244, 12 September 1933, Page 7

THE RESERVE BANK

LONDON PRESS SYMPATHETIC. THE MEASURE SURVEYED. EMPIRE UNITY ASSISTED. (Special to United Press Association of New Zealand.) Received September 12, 10.35 a.m. LONDON, Sept. 11. The papers generally are sympathetic to the proposals for a reserve bank for New Zealand. The Evening Standard’s city editor writes editorially:—“lt is evident that New Zealand’s scheme is on sound lines. A central bank, which shall act only from economic considerations and whose management will be bound to look only to the material welfare of the country, is definitely the aim of the Bill. Certainly, a central bank, if kept on the lines laid down, would ffacilitate business between the London money markets and the Dominions, and would also at times he able to drive hard bargains with London ‘ in regard to financing operations. A welcome detail of the scheme is the limitation of the dividend on the shares to a maximum of 5 per cent.” The Financial News welcomes the proposal to re-introduce the Bill and refers to the fact that the Minister of Finance (Rt. Hon. J. G. Coates) was careful to point out that the establishment of the bank would not involve the surrender by the State of its right to determine its monetary policy, and, while that is in the last resort one of the main objects of the establishment of a central bank is to ensure that expert judgment, a.nd not political pressure or sectional self, interest, shall control monetary policy. The Morning Post’s city editor is sympathetic to the proposal, but stresses the importance of reserve banks being entirely independent of State control.

The Financial Times says that criticism has been directed mainly at that part of the measure designed to curtail the functions of the trading banks, and to the "relation of currency and credit policy to that of the Bank of England. It says the first of these criticisms has long since been met/ Regarding tile second point, it is evident that there is some difficulty in the minds of critics in distinguishing between co-operation with, and subjection to, the monetary policy of the Mother Country. The establishment of a reserve bank no more implies the domination of New Zealand’s affairs by outside interests than does the linking with the sterling of the exchange of certain foreign countries govern the economy of the latter. The article continues in further terms of approval of the proposal as an important development in a greater Empire unity. It eonclues: “Necessarily, international banking co-operation cannot be entirely free from political considerations, which is not the same tiring as State control.” The financial editor of the Daily Telegraph commends Rt. Hon. J. G. Coates’s advocacy of the establishment of a New Zealand reserve bank, and says Britain generally will agree with Mr Coates’s assertion that the control of currency and credit should not be left in the hands of commercial banks.

After approving other points, in favour of a central bank, the Telegraph says: “Mr Coates might have added another equally important point—namely, that a reserve bank ensures a sound exchange and freedom from arbitrary depreciations dictated by sectional interests.”