RESERVE BANK'S YEAR

Chronicle (Levin), 11 July 1946, Page 5

RESERVE BANK'S YEAR

-Press Association

* : NET PROFIT QF OVER HALF A MIl(LION

By Telegraph-

WELLINGTTOJN, July iu. The net prolit of the Reserve Bank oi New Zealand, after making provision for depreciation and contiugencies, amounted to £540,919 18s 9d for _ ttio year ended March 31 last, states the annual report of the Board of Directoi> of the Bank, tabiefl 111 Ihe House oi Representatives today. This amouiii has sinee been paitl into tlie publie ac. eount to the credit of the Consolidated Fund, Th.e report states that the total oi notes outstanding at March 31 was £48,489,031, an increase of approxiniate ' ly £3,290,000. This increase was smallei by £(5(50,000 than that recorded for thiprevious year and represented a further slowing down of the rate of increase in notes outstanding whicli became ap parent in that year. State deposits under Ihe heading of demand liabilities, rose by approxiniate ly £9,000,000 from £15,590,000 to £24,520,00 during the year under review. Total deposits held by trading lianks at the Reserve Bank increased from £32,710,000 to £47,770,000, an iiipreasc of approximately £15,000,000. The rise j in these deiiosits was a reflection of the ] fact that, eompared »with exports, im : poi'ts were in relatively sliort supply : Conseciuently the proportion of expor; proceeds whicli trading banks had oecasion to buy from the Reserve Bank by drawing on their balances liere, was 1 eonsiderabljr less than would have been ; had all imports whieh were lieensed ! been availabje to New Zealand. j v A substantial increase of £17,530,00" in the Bank's holdings of sterling ex- j change from £43,124,989 at Marcli 31, ■ 1945, to £(55,(555,890 at the end of last | March, was due to this low level of im j ports in relation to export income and also to^the fact that, although large repayments of overseas deljts wertmade during the year, part of tlie sterling required for this and ofliei pnrposes was provided by the New Zealand Higli Commissioner in London from funds whieh he held at the be ginning of the year and from am oun ts whieh were received by liim during the year, The weekly average of advances tc the Marketing Departnient was lower by £437,703 tlian in the previous year. A11 increase of £1S,000,000 in advances for other purposes from £27,000,000 to £45,000,000 was the result of the banks discounting ad.ditional treasury bills part of the proceeds of whicli were used by the Government to purchase sterling from the bank in eonnection with the repayment of the amount owing to the British Government under memorandum of seeurity. The total of investments as at Mareh 31, 1945, was £12,9-70,000 compared with £5,190,000 at the end of Marcli last, a decrease of approximately 7,780,000. The amount of money in coin, note> ancl demand deposits, increased In £32,400,000 during the 12 months up t. the last Monday in' March whieh wa.the nearest date to the end of th | linaaeial year for whieh the coinbined [ figures of the Reserve Bank and trading banks were ascertainable. Tlie chie'i reason for the present higli level of nei overseas assets of the banking system and consecjuental rise in the volunje oi money, was the delay in arrival of a large proportion of authorised imports As imports beeame available in more adecj[uate quantities, the result should be that the volume of money would Im brought into more lialanced relationsliip with the volume of gpods and services offered for sale in New Zealand and the upward pressure on prices should become less. An importaiit considera tion whieh was becoming more widel.y recognised, was that wise monetarv measures qould raake their best con tributions to the betterment of stan dards of living and ec.onornic securitv only if they were allied to the ex panding production of goods and services, the enjoyment of whieh was the real test of prosperity.* All ligures given are in terms of New Zealand currency.