EXCHANGE RATES.

Taranaki Daily News, 3 September 1924, Page 6

EXCHANGE RATES.

NEW SYSTEM URGED. A QUESTION OF DIFFICULTIES. Negotiations avith Britain. By Tefegraph—Press Association. 55’ellington, Last Night. The exchange on money question was brought up In the House this afternoon, when Mr. W. D. Lysnar (Gisborne) asked the Brirae Minister whether he would communicate with the Imperial Government with a view to inducing them to introduce legislation on the subject of exchange. Mr. Massey said the exchange position had been receiving serious attention and at the present time communications were passing between the Government and the Dominion’s representative in London with the object of effecting an improvement. A return to the gold standard would no doubt result in the disappearance of most of the difficulties, but this was not practicable immediately. Mr. Massey said the question of issuing currency bills was carefully considered by the Imperial Economic Conference in 1923, when it was decided that it was neither necessary nor desirable to adojK complicated plans for a new instrument of credit such as Empire currency bills, which involved difficult and disputable constitutional financial questions. It was, however, concluded that the position could be ameliorated by the establishment of a central bank of issue in this or any other country, with ample power to effect and control exchange operations as between its own country and the country or countries with which it principally trades. This bank could undertake to issue its notes against sterling or recognised securities such as British Treasurv bills, and convert them hade to sterling at fixed rates by the method known as exchange standard besides buying and selling sterling for notes. The bank would have power of re-dis-counting for other banks, whereby the latter could replenish their cash. The central bank would also require to control the expansion and contraction of credit as compelled by the trend or exchanges.

“The whole subject is full of difficulties. but it is not being lost sight of either in this country or any rf the countries of the Empire, and any system tending to an improvement will be availed of.” added Mr. Mdssey.

Replying to the Leader of the Opposition (Mr. T. M. Wilford), Mr. Massey said he could not tell him what rate of profit the banks were making out of exchange. Mr. 55’ilford said he understood it was a very high rate.