STERLING FUNDS

Opotiki News, Volume II, Issue 176, 1 May 1939, Page 4

STERLING FUNDS

SLOWNESS OF BECOVEBY " ” .. li CONCERN IN LONDON BALANCES OF BANKS .The apparent absence of any recovery in the. overseas assets position of the Reserve Bank of New Zealand has been responsible for some concern in banking quarters in London, according to. the Economist, when com-, ineiiting upon the position toward the end of February. At tlie time the Reserve Bank held approximately £4,i 623,000 sterling, compared with the latest figure of £4,663,060 and £17,472,000 ai. year ago. : On 1 the other hand' the, pet overseas assets of the trading banks at the end of-/February were £6,716,000, as against £6-,053,000 at the end- of last November', prior to the imposition of import t.rjfstrictions. “The nyqst .obvious reason for the lack of ajiyi improvement,” states the journal, “lies in the fact that the control of imports did not become immediately} effective, many transactions initiated before the restrictions were announced bringing tlieir influence to bear upon the Reserve Bank’s figures during December andi January. Another poiftt to bear in mind is the fact that there' has as yet been no settlement between the Reserve Bank and the trading blinks in respect of sterling bought and soldi ;by the trading banks against; controlled imports and permitted imports. Balance of Sterling. “The problem of determining exactly what balance- is due to or from the Reserve Bank in respect of such transactions is likely to prove extremely. coniplicated, and its final solution is being postponed to a date as yet unspecified. “This means that some of. the sterling djue to the Reserve Bank-may have been piling up in the accounts in-" the trading bankfs. As far as' may ho judged from the experience of individual institutions, however, such accumulation is likely -to have proved almost negligible. “A third factor in the exchange, „ position was the repayment towards the end of Jaiiuury of the Dunedin 3 'per cent, sterling loan which involved the outlay,; of £200,006 sterling. Ft- would, howdvef, he incorrect to assume that the whole or even a substantial part of this repayment was met out of ■ the resources of the Reserve Bank. “The experience df the trading banks,” aiMs the • Economist finally, “suggests tfiat the control scheme is working wi.th reasonable efficiency, that- it has Effectively put a stop to the outflow of capital from New Zealand and that the machinery for the licensing of, imports is beginning to function with 'far fewer creaks than had been exjjepted.”