CENTRAL BANK

Poverty Bay Herald, Volume LX, Issue 18235, 2 November 1933, Page 11

CENTRAL BANK

LONDON TIMES’ COMMENT THE CASE OF N.Z. Like several other members of the British Commonwealth, including India and Canada, New Zealand has not so •far found it expedient to set up a sep-. urate Central Bank of its. own, and the management of the currency and the exchanges has hitherto- been left in the hands of the commercial banks, comments the London Times in a leading article. * la less difficult and complicated times, when the principal currencies of the world were comparatively stable, this system no doubt worked well enough. But the problem of currency control has recently become so important that it has been widely recognised by the most responsible and experienced financial opinion that-the setting up of an independent currency authority in all economically developed countries is a matter of urgent importance. Thus not only did the World Economic Conference unanimously recommend the establishment of a central institution in those countries which are at present without- one,, but in .addition the delegates of the Empire countries in a .special resolution emphasised the importance of maintaining stability of exchange rates between the various countries, of. the Empire—a task- which will certainly be greatly facilitated by the establishment of central banks in those portions of the Empire which do not at present possess such institutions. Of recent years both South Africa and Australia have provided themselves with a central hank, and India is at present engaged in creating one, while in Canada a commission of experts is also considering a similar proposal. It would he useless to deny that the Reserve Bank Bill has aroused a certain amount of opposition in New Zealand, but this has come largely from interested parties. There has also been a feeling in certain quarters that the creation of a reserve bank has to some extent been inspired by a desire on the part of the British monetary authorities to dictate to New Zealand .in matters of monetary policy. Nothing, in fact, could be further -from the truth. The creation of a central bank, which has everywhere been recognised as the symbol of financial maturity, is. on the contrary, the surest guarantee of independence, and from the business point of view has the undeniable advantage of centralising the cash resources of a country in such a way as to render them most easily available in •times of need.