RESERVE BANKING

Otago Daily Times, Issue 22053, 8 September 1933, Page 8

RESERVE BANKING

The Bill for the establishment of a Eeserve Bank in New Zealand will be re-introduced by the Government in the forthcoming session of Parliament. That is a conclusion that may be drawn from the fact that we have received from the Minister of Finance a series nf five articles that are intended to explain to the public the functions that are exercised by a Eeserve Bank and to convey an impression of the need and value of such an institution. The first of these articles is published this morning. It is probable that there is a certain amount of misunderstanding in the Dominion concerning the purpose which a Reserve Bank fulfils. And if so this misunderstanding is to a large extent due to the fact that the public has had no experience of the operation of a Reserve Bank and that, moreover, there is no banking institution in Australia, our nearest neighbour, that corresponds to an institution of the kind which the Government proposes to bring into existence. Nor is there a Reserve Bank in Canada. It is hardly surprising, therefore, if the New Zealand community awaits conviction, such as the series of articles may conceivably bring about, with reference to the necessity for the establishment of a Reserve Bank in the Dominion, and the doubt which it has entertained upon the point has been strengthened by the fact that the local banking authorities have themselves looked somewhat coldly upon the Government's proposal. If, however, there is to be a Reserve Bank, as may be expected if the Government has, as would seem to be the case, recovered from its OAvn lukewarmness of the past concerning the project, it is certainly desirable that the institution should be, as the Bill proposes, entirely removed from control of the Government itself. A Reserve Bank that was politically controlled would be an innovation of a most undesirable nature.