EMPIRE CENTRAL BANKS

Waikato Times, Volume 116, Issue 19458, 24 December 1934, Page 6

EMPIRE CENTRAL BANKS

“ The main thesis of a lecture recently delivered at Nottingham by Sir Josiah Stamp was the necessity for developing financial cooperation within the Empire as an indispensable element of Imperial economic policy, since finance and trade are inseparably connected,” comments The Times. “ Until quite recently it has often almost unconsciously been assumed that finance and commerce are separate departments, and indeed in the pre-War world with its ‘ automatic ’ gold standard this assumption was not unreasonable.

“But to-day in a world of fluctuating currencies and unstable exchanges the financial factor is all-important, because it exercises a vital influence upon the direction and volume of trade between the different countries of the world. ‘lf Empire trade is to develop S. will he necessary, therefore, to evolve some community of policy between the monetary authorities of its constituent parts. In the working out of this monetary co-operation the central banks of the Empire are obviously destined to play a leading part.

“ Within recent years the countries comprising the British Empire have, one after another, set up central banks of their own, and there now exists a chain of these credit institutions which embraces Great Britain, South Africa, Australia, New Zealand, India, and Canada. In several of these countries the creation of a central bank, which should really be regarded as the hallmark of financial maturity, has been greeted with some suspicion, prompted by the fear of dictation from the Mother Country. Such fear, as Sir Josiah stamp rightly pointed out, is really groundless.

“It is fully realised here in London that the first consideration of each of these new central banks must always be the interest of its own country. But if the Empire is to develop a successful system of financial co-operation—such as was envisaged, for example, in the monetary resolution. framed by the Empire delegates at the World Economic Conference last year—it is clear that sectional interests in each of its constituent parts must in some degree be subordinated to those of the Empire as a whole. In organising these common interests, finance must take its share; and not the lqast important function of the central banks will be to promote Imperial economic interests by working out a policy of monetary co-operation.

“What form precisely this co-operation is ultimately destined to assume cannot yet be foreseen; but the existence of a ‘ sterling area’ is already presenting the various countries of the Empire with new opportunities for collaboration, and the instrument for the development of a common policy has already been created in the system of Empire central banks, now all but complete.”