CENTRAL RESERVE BANK

Poverty Bay Herald, Volume LIX, Issue 17951, 1 December 1932, Page 7

CENTRAL RESERVE BANK

PROPOSALS OF THE BILL NIEMEYER PLAN FOLLOWED FAR-REACHING PROPOSALS (Parliamentary Reporter.) WELLINGTON, this day. As a result of careful Cabinet eon sideration, and in the light of infbrrna tion made available by the Hon. W. Dovvine Stewart, Minister of Finance, the Central Reserve Bank Bill, which was placed before the ( aucus of the Coalition Party to-day, will adhere very closely to the .recommendations of the Niemeyer report. The legislation, it is gathered from an authoritative source, in addition to establishing an independent reserve bank charged with the responsibility for the stability of New Zealand currency, invested with the exclusive privilege of note issue, and charged with bolding Government accounts and the banking reserve, of New Zealand, will.make NewZealand notes inconvertible in New Zealand, but convertible into sterling at rates fixed within certain limits. Also involved, is the niuficaubn of the noteissue and its concentration in the reserve bank, with a resultant abrogation of the note.issuing powers oL existing banks. The trading banks, will be required to transfer to the reserve bank the gold they now bold in New Zealand in exchange .either for iosei’.ve bank notes, with which they can pay off their own notes, or crpdjt at, the ’reserve bank. They will bo requited also to keep with the reserve bank minimum reserves of 7 per cent, of their demand liabilities in New Zealand, and 3 per cent, of their time liabilities in the Dominion. , If the provisions arc as foreshadowed, the existing prohibition on the export of gold coin from New Zealand will be withdrawn. NO POLITICAL INTERFERENCE In accordance with the Niemeyer recommendations, the reserve bank is entirely free from both the actual fact and fear of political interference. The sphere and functions of the bank will be entirely different from that of trading banks. It will not be culled upon to act as a trading bank or to compete with them. If the Niemeyer suggestions are carried out in detail, as it. is understood they have been, the capital of-the reserve bank will be £500,000 in fully paid iin shares which will be offered to the public at par. The management will bo in the hands of a governor and deputy-governor elected at the annual general meeting of shareholders, who will also elect a.board of five directors. It will be required of both the gnvernov and deputy-governor that both have had banking expel ience. Two of the directors must have been, or must actually be engaged in a primary industry, two others will be selected from industrial and commercial pursuits, and not more than one of the directors mav be a director of another bank. Members of Parliament, and State employees will not be eligible. Tt is understood that at least 12 months will be required to complete all l he details and put the provisions of the legislation into operation, and it. is said tlmt the Government is considering the question of selecting as governor of the bank an authority from Great Britain. Reports are current that t'-e position or demitv-governor will be filled by the appointment of a well-known New Zealand Treasury official.