MONEY PROBLEMS.
By a striking coincidence, there are published to-day a report of an address by Sir Otto Nieraeyer explaining the intimate association of New Zealand with international financial problems, and a summary of a report by the Financial Committee of the League of Nations outlining the problems of immediate importance to the operation of the world's industrial and commercial activities. The international committee has again directed attention to the dangerous possibilities of the world's monetary needs exceeding the declining production of gold required as the basis of its complicated system of credit, and has expressed the opinion that a serious situation may develop in a few years "unless alleviating measures are taken in time." The report suggests various means by which the monetary use of gold may be economised; some of them may be enforced by banking authorities, assisted by enlightened legislation, others will require intelligent cooperation by the general public, others, again, are contingent on international co-operation and agreement. A considerable part of Sir Otto Niemeyer's address was 'devoted to a description of the progress that has already been made toward greater international cooperation in this sphere, through the agency of the great central banks and reference was made to the expectations that this progress will be assisted by the new organisation of central banks, the International Bank for Settlements, which, created to manage war reparations, may develop into a powerful instrument for preserving harmony and assisting the material advancement of the world. Since Sir Otto Niemeyer was invited to New Zealand to advise the Government in regard to banking, currency and exchange questions, his address may bo profitably studied as an exposition of the principles upon which he will make his recommendations. He particularly emphasised the importance and the value of a central reserve bank, as the most effective organisation for the regulation of currency, for the preservation of stability in foreign exchange, and as a medium of co-operation with international movements, especially between a Dominion and the Bank of England. To exercise these functions, the central bank must be the only institution issuing bank notes and must have command of the gold reserves—especially if the latter are to be reduced to ■ the most economical minimum, as the League Committee proposes. The adoption of a gold standard does not, however, imply the circulation of gold coins, the return of which to domestic currency may be regarded as indefinitely postponed. It is essential that the Dominion's currency should be brought into definite relation with gold, whether on a gold bullion or a sterling exchange standard, so that extreme fluctuations in exchange rates will be prevented. The technical details of the measures to be taken to bring the banking and currency system, now resting on the insecure basis of war legislation, into line with modern practice will be elaborated in the report which Sir Otto Niemeyer is to make to the Government for translation into legislation next session. His address yesterday affords an admirably lucid indication for the general public of the character which that legislation will take and of the important changes in banking organisation that may be expected.
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New Zealand Herald, Volume LXVII, Issue 20678, 25 September 1930, Page 10
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521MONEY PROBLEMS. New Zealand Herald, Volume LXVII, Issue 20678, 25 September 1930, Page 10
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