WELLINGTON NEWS

Hokitika Guardian, 5 July 1930, Page 2

WELLINGTON NEWS

INTERNATIONAL BANK

(Special Correspondent.)

WELLINGTON, July 3

The Bank of International Settlements, or 8.1.5. as it will be more familiarly known, formally opened its doors on May 17, and on the some day file financial payments under the Dawes plan were made by the AgentGeneral for Reparations. The shares of the 8.1.5. were issued on May 20. The French quota of 16,1.00 shares were■ offered to the puotic, the issue being enormously over-subs'.-noed, applications for more than two and a half millions shares being lodged mtii the Bank of France. The total amount of application moii.ey was £63,000,C00. The Belgian quota of 16,000,000 shares was also offered to the public, and was over-subscribed twelve times. The Central Banks of other countries participating in the issue refraiiysd from making public issues, though in some cases the sliaies may be placed privately. In an exposition of the functions and scope oi the B i.S. Sir. Clianes Addis, a Director of the National Bank, said that in the present ch.y need for economy in the use of goid the bank could come tc the h'dij ci the Central Banks, it could lied balances for its reserves for its note issues, or deposit liabilities, which might he regarded as the equivalent of gold, since it was only in gold currencies that the bank would deal. It was for that reason that ih„ nank was not required to hold any geld reserve of its own. .It hid no currency of its own to protect, and its deposits would, in Lift, be cueicl, not by 40 or 50, but iv 100 per c'lit or more of liquid assets. Ihe Bank had no power of note issue and could only redistribute existing credit. It could not by itself create credit, but it could do so through the Central Banks. It might he objected that this might lead to inflation, but there need be no fear that there was any danger of inflation being carried too far in the hands of the Governors of the Central Banks oil the hoard of the Bank for, International Settlement. As regards the future one. might be allowed to imagine a financial Utopia, when the • cumbersome and costly physical transfer of gold would no longer be necessary. ' A debit and credit entry in the hooks of the hank would be all that was required. If, was also theoretically possible that a time might come when the elements of freights and insurances having been eliminated, the gold points of expoit and import, between which the rates of exchange oscillated around parity, would tend to draw more closely together, until they finally merged in an international unit, not of money but of ; account.

BRITISH EXPORT CREDITS Following on the recommendation contained in the report last December of a committee of three, including Sir Otto Niemeyer, a high official of the Bank of England, who is on his way to Australia to consult with Commonwealth authorities on the exchange position, the period of operation of the Brtiish Export Credits Guarantee Scheme has been extended. The scheme in approximately its present form, came into active operation in the autumn of 1923, and has proved increasingly popular, for the last financial year ended. May 31st, the contracts entered into .by the Export Credits Guarantee Department amounted to £5,661,000 compared with £4285, 000 in 1929 and £2,400,000 in 1928. Under the Overseas Trade Acts. 1920-29, the Baord of Trade has been authorised to make arrangements not exceeding £06.000,000 in connection with the exports of goods wholly or partially manufactured in the United Kingdom, but it has been provided that such guarantee should he given before September .8, 1931, and that they should not remain in force latei than September 8, 1936. Appointed in 1928 the Committee recommended that the period in which guarantee facilities could he granted should be extended for a further period of three years to September 1934. By the Government’s resolution, new guarantees may now be given up to March 31, 1935. and they may remain in force up to March 31, 1910. the maximum limit remaining at £26,000,000. Since August last the scheme has been available in connection with goods to Russia, and up to March 31 last contracts had been concluded covering transactions with that country amounting to £1,305,000 all on short term. Credit insurance as applied to the export trade is of comparatively recent origin and it is still regarded as in the experimental stage. It is undersood that its possibilities as a means of developing British trade are being increasingly appreciated.