ITALIAN CURRENCY

Otago Daily Times, Issue 20291, 27 December 1927, Page 9

ITALIAN CURRENCY

RETURN TO GOLD STANDARD. FAVOURABLE ENGLISH COMMENT. (British Official Wireless.) (Pres* AssociaUon —Bj Telegraph—Copyright.) RUGBY, December 23. (Received Dec. 24, at 5.5 p.m.) The announcement that Italy, as from yesterday, had returned to the gold standard, is the subject of favourable comment here. The Italian financial delegate in London states that the decision was arranged in collaboration with the Bank of England and the Federal Reserve Bank of New York, which have acted on behalf of 15 banks of issue of the States where the gold standard has been adopted. Foreign credit of £25,000,000 has been arranged for the defence of the new rate. Signor Mussolini, at the council at which the decision was taken, said that the step would have a profound effect on the development of the national economy and would contribute to the reconstruction of world economy. This view is endorsed by The Times, which, in an editorial note, says that the announcement comes “as a pleasant surprise that will be welcomed not only by the Italians but by all who appreciate the importance of a sound currency and the prosperity of the world. The reestablishment of the lira on a gold basis is an event which marks another milestone on the long and difficult road of European reconstruc tion.” * Tracing the steps which led up to the new movement towards financial rehabilitation, The Times says that the first was the balance of the Budget and the next was the funding of war debts to the United States and Great Britain, which enabled Italy once more to borrow abroad. Meanwhile, in spite of these salutary measures, the currency was still in a precarious condition. In the spring of 1925 and again in 1926 the lira underwent rapid depreciation, and in the autumn of last year Signor Mussolini embarked on a rigorous policy of deflation. The effect upon the currency of Iho measures adopted was assisted by a huge influx of foreign capital, and the rate of exchange rose rapidly. Italy was thus enabled to accumulate large reserves, but the pace of revaluation was too hot for industry, and severe depression set in, the effects of which are still being felt.” In these circumstances the Government rightly decided to put an end to revaluation, and the new policy of parity, which is slightly above the exchanges’ rate current during the last few months, should help to case the fiscal transition. The achievement of a currency based on gold, and. therefore, released as far as it is humanly possible from the contingencies of politics, is a victory of which Italy has just reason to be proud. CO OPERATION OF CENTRAL BANKS. SOUND CURRENCY CONDITIONS. NEW YORK, December 24. (Received Dec. 26, at 8 p.m.) The London correspondent of the New York Times says it is clearly understood there that Italy’s return to the gold standard was virtually arranged through the collaboration of ' central banks of other countries. “ This has drawn fresh attention to the manner in which the world’s great financial institutions are moving in unison for the purpose of attaining and insuring sound currency conditions. The success of their cooperation has been so pronounced in the past that its continuance in future is considered fully assured.”—A. and N.Z. Cable.