The Guardian And Evening Star, with which is incorporated the West Coast Times THURSDAY, SEPTEMBER 29, 1932. CENTRAL BANK.

Hokitika Guardian, 29 September 1932, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times THURSDAY, SEPTEMBER 29, 1932. CENTRAL BANK.

One outcome of the conference at 'Ottawa was conveyed by the Prime Minister earlier in the week, when he announced that legislation would be brought down this session to establish a Central Bank in New Zealand. This subject formed the matter of a special report by 'Sir Otto Neimeyer, the British financial expert, following his visit to New Zealand last year, and it has now been discussed at Ottawa —the outcome of these deliberations is the proposed legislation. The Central Bank is the device by which most countries have introduced economies and dteil'ibcrate management of their monetary systems. Central banking has also been made necessary by the. interdependence of the monetary and credit systems of the world and the need, if not for an international clearing-house, at least for international co-operation among bankers. If such co-operatio" is to'"be effective there must be some degree of centralisation in the currency and credit systems o,f the States concerned. ' State in which the right of note-issue is divided among several banks is obviously at a disadvantage when it attomps to carry out a financial policy in agreement with other

Staten. These, in the main, are the consid rrabions Tvh.ich led the International.' Financial Conference held at BruS3o.lt; in 19,20 to recommend that “in countries where there is no Central “Bank of ntf.ue, one should be established” ; e»‘nd in the last ten years this adviete has very widely been folBut it would le idle to pretend that central banking hasbeen uni-, formly sii- icessful wherever- it has been tried, of That there is.complete- (agreement a,s to how central banks should ho oonsti tilted and what functions should be. allotted to them. In Poland, Japan, an d some of the Sbuth American Staton central banks have failed to assert effective control over credit, while in South Africa, the Reserve Bank has been in difficulties since it was .esc ablished. Moreover, such' problems as the relations ,of central hanks to .gove: mments and the (extent to which they sh ould 1 be allowed to operate on the rue :i market must lie considered unsolvet' and for the present countries contemplating setting up central banks must be. guided , more by the nature ol their existing financial institutions tlilan by general principles. The experience of Ptlier istatea has, however, the taking of certain precautions',; It is viery necessary that the central, batik management should be beyond the • influence of political happenings, .and it will have to be safeguarded in (every possible manner to prevent im proper influences to affect the geuieipi, management of the concern, so, that the best interests of the country, oap be safeguarded.