BANKING COMMISSION

New Zealand Herald, Volume LXXII, Issue 22240, 15 October 1935, Page 5

BANKING COMMISSION

INQUIRY IN AUSTRALIA THE TERMS OF REFERENCE EVIDENCE OVER WIDE FIELD As the result of a pre-election pledge given by the Prime Minister of Australia, Mr. J. A. Lyons, a Royal Commission has been appointed to inquire into the monetary and banking systems. The terms of reference are wide and they appear to cover matters dealt with by the Mncmillan Committee in Britain as well as by the Monetary Committee in New Zealand. However, the extent and nature of the evidence taken will depend largely on an interpretation of the terms. The actual terms of reference are:— "To inquire into the monetary and banking systems at present in operation in Australia, and to report whether any, and if so what, alterations are desirable in the interests of the people of Australia as a whole, and the manner in which any such alterations should be effected."

According to a Melbourne report, it is almost certain that inquiries will be made into the possibilities of influencing business conditioris and the price level through the extension of the central banking system, and emphasis may be placed on the desirability of a central bank controlling the volume of credit, interest rates, and the'short term loans.

Other and important inquiries that will probably be made are:— Whether the existing crodit facilities are adequate for the sufficient functioning of producers both in primary and secondary production. • ' How far a central bank can go in enlarging and contracting credit in order to avoid temporary contingencies in the money market. Tho question of exchange rates and tho co-operation between tho Treasury and banking authorities.

Whether or not it is advisable to shorten the margin between rates of interest paid on advances and those paid on fixed deposits. Tho absence of any organised market for the investment of short term funds'.

Tho establishment of public bill markets, embracing either or both treasury bills and ordinary trade bills. The membei's of the commission have already been appointed. The inquiry is expected to take 12 months.