THE NIEMEYER REPORT

Hokitika Guardian, 31 July 1931, Page 5

THE NIEMEYER REPORT

TABLED N ITHE HOUSE. (By Telegraph —Per Press Association) WELLINGTON, July 3U. Sir Otto iMcm.-yu s itr-u wi banking iu.u cun cm y m Now Zealand was i,..u '-a me tunic o' rue .Louse 01 i.e[jiMlntat.uS lu-lllg.it. on- ouu .Mcuuyer summarises bis let ~uiuk-i.u.imui a.-> iiilluws: — \l) l'cii.iu.u in i.egism utm should be pasoeii ijM.iviug u.e -\e\v Zealand not. i.icuitv'a.uue- iii .sett Zealand, . blit 1 t.meiiiD.e into surl.ng at rates fixed w 1 tmn tt-ruuii limits. 1 irk pendent reserve banks should be set up and chaigod with tin* respousihinty lor the stability Of New Zealand 'currency invested with the privilege t.i note issue, and charged with holding the Government account and banking reserves of New Zealand. (3) Note issue should be unified and concentrated in the Reserve Bank note issuing powers of existing banks being abrogated. (4) Trading banks should be required to ' transfer to the reserve bank gold they now hold in New Zealand in exchange either ior Reserve Bank notes with which they can pay off their own notes as for credit at Reserve Bank. (5) Trading Banks should be required to keep with the Reserve Batik minimum < reserves of seven per cent;, of. their demand liabilities in .New Zealand and throe per cent, of their time liabilities in Npvv Zealand, (6) Thereafter existing prohibition on the export of gold coin from New Zealand should be withdrawn. Dealing with the note issue. Sir Otto Niemeyer says that lie does not think either a notes board or currency and exchange board would offer a permanent satisfactory solution in New Zealand. The course be would recommend would be the establishment (as in other Dominions) of a Reserve Bank of a size appropriate to New Zealand’s condition. The general advantages of such an institution, if based on sound principle, were he thought very considerable. It would in addition t« other advantage provide machinery which would not only be useful but also indispensable for gradual development over tlie period of years of the short term money market in New Zealand. Finally such a Bank would provide an instrument for co-operation with central banks of other countries, which is becoming ol increasing importance. Sir Otto Niemeyer considers the fundamental condition to the establishment of a Reserve Bank is it must be entirely free from both actual fact and fear of political interference.