RESERVE BANK

Otago Daily Times, Issue 22368, 15 September 1934, Page 14

RESERVE BANK

POSSIBILITIES OF CREDIT CONTROL ADDRESS BY PROFESSOR TOCKER. “ The operations of the Control Reserve Bank,” was the title of an address given by Professor Tocker to the oauterbury branch of the Economics Society at Canterbury College on Thursday evfen1C Professor Tocker referred to extracts, from the provisions of the Central Reserve Bank Act, and commented on the restrictions imposed on the bank’s activities. The object of the restrictions fie said, was to ensure that the funds .01 the Reserve Bank should be preserved at all times in the most liquid form possible. 13y its very nature as the Reserve Bank of the country, its assets could not be allowed to become frozen. A direct result of the creation of the Reserve Bank, said the speaker, had been the provision of a uniform note-issue. Previously there had been six separate issues. The advantage of uniformity in this respect was not apparent at first sight, but considerable economies had been brought about through the pooling of ihe six branch reserves held against tlie separate note issues. Similarly, each bank had held its own reserve in London, and economies could be effected also by centralisation of overseas reserves. It was plainly anticipated that the Reserve Bank would undertake a discount and advance business in New Zealand, and assume control of credit in the best interests of the country. But before it could do anything in the way of credit control, it would have to have funds on loan. So far, with no loans recorded, the bank’s statements could not indicate anv policy in respect of credit. We had done our part in New Zealand, said Professor Tocker, in the creation of a chain of central banks throughout the Empire. Until 1911, England had been the only Empire country with a central bonk. Now such banks existed in South Africa, Australia, and New Zealand, and both’ in Canada and in India-steps had been taken toward formation. In a few years all the Empire countries would have central banks. A common monetary policy should be adopted throughout the Empire, and central banks seemed a necessary part of tho machinery for operating such a policy.