RESERVE BANK.
PURPOSE OP ITS FUNDS. NEED TO BE KEPT LIQUID. “It seems to me that the idea the Government evidently has of utilising the resources of the Reserve Bank in various directions is wrong in principle and may easily defeat the chief purpose for which the hank was established,” said Mr. A. A. Ross, president of the Auckland Chamber of Commerce, in a statement last week. “In addition to the funds created by the bank by the issue of notes, the trading banks lodge with it certain deposits free of interest. These are used to purchase sterling credits. Indications point to the fact that the Government appears to think it can use these credits to finance anything it considers desirable. It may be legitimate to do so, but to a limited extent only. The fund the Reserve Bank has built up constitutes its reserve. The bank is a reserve bank and its justification is its reserve which must be kept in a fairly liquid condition to meet any situation that might arise in a time of financial crisis. If the reserve is to be tied up in all sorts of things, such as financing a deficit to the dairy farmers or various public works, the funds are no longer in a liquid state and, therefore, no longer in a condition essential for a reserve bank.”
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https://paperspast.natlib.govt.nz/newspapers/WAG19360526.2.64
Bibliographic details
Wairarapa Age, 26 May 1936, Page 7
Word Count
226RESERVE BANK. Wairarapa Age, 26 May 1936, Page 7
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