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Hokitika Guardian, 7 October 1932, Page 4

Wuetueii the criticisms cabled from London of the proposal to establish a central bank in New Zealand can -bp accepted as representative of City opinion is at least dpubtful, After all the ■ original and definite proposal was made by -Sir Otto Niemeyer who may be supposed to have been expressing the view of the Bank of England, wluqh as a rule is in liarmany with that of the British Treasury, That there will be many problems to be solved before a centra! banking system can be devised to suit New Zealand’s primitive stage of financial development is, of course, well understood. Existing uncertainties as to currency backing and monetarfy standards are troublesome additions to difficulties already discussed in. these columns. Because of these and' other obstacles we have recommended that New Zealand should examine the ground carefully before committing herself to a new financial organisation. More mischief tfian good might canie out of swapping horses while crossing the present tricky, financial stream. The existing system has y stood up to exceptional strain and stress and worked tolerably well, uVt the same time it is.recognised that New Zealand's hanking and currency legislation is in an unonmlous pom lion, at the present time, as a result of the accumulation of War-time Pleasures which Have never been adjust'd to peace-time conditions, comments a northern writer. Hence reforms cannot, lie postponed indefinitely. In ordinary circumstances, however, it would have been preferable to await a time whpn the Dominion approached i:oarer to economic equilibrium before making changes. The new organisation could then be built on a more stable end permanent hem::;. Has (anything occurred of (sufficient import am p io modify that cautious policy and to nut forward tJ«e date when new banking laws must he enacted? Two recent events have a hearing on the answer to he given 'to that question. Some few months ago when tl n overseas credits pools wo abolished, there were fears lest New

Zealand’s currency should be further depreciated by tlie manipulation ctf interested parties. People then asked themselves whether a matter of national interest could thus be subordinated to sectional ends, if it were so, then they argued that it was time New Zealand became master in her own financial house. The other event was the- agreement at Ottawa on a. common monetary policy for the Empire to which New Zealand adhered but in which die cun hardly guarantee effective co-operation in the. loose state of her existing financial organisation. These two events must be considered to have had an influential and probably decisive bearing in inducing the Government to bring forward its banking legislation ! 'at'an earlier stage than, otherwise might have seemed advisable.