8.—16.

Overseas Funds, Reserve Bank and Trading Banks. During the year there was a diminution of £(N.Z.)7,820,000 in the combined net overseas assets of the whole banking system in respect of New Zealand business, as shown by the following comparions of the figures for the last Mondays in March, 1937, and March, 1938, respectively : —•

The lowest point reached during the year —viz., £22,985,000, on the 31st January, 1938—was £5,095,000 less than the lowest figure for the previous financial year (on the 28th December, 1936). The figures relating to external trade shown later in this report indicate that the decrease in overseas funds resulted in the main from a shrinkage in the surplus of exports over imports. Trading Banks. The following combined figures are compiled from the monthly returns made by the trading banks to the Reserve Bank in accordance with statutory requirements : —

The percentage of cash to liabilities shown above may appear relatively high when compared with the cash ratios of banks in the United Kingdom; but it must be remembered that the existence of a short-term money-market enables the latter to reinforce their cash reserves with money at call or short notice and also bills of exchange and certain other securities which can immediately be converted into cash. On the other hand, the banks trading in the Dominion can convert into New Zealand currency without delay any liquid funds they hold in London in respect of New Zealand business. The outstanding variations disclosed by the above figures are the increase of £8,883,000 in the advances and discounts on the one hand and the decrease of £5,651,000 in the overseas assets on the other. The aggregate of the unexercised overdraft authorities granted by the trading banks fell during the year by £431,026 to £24,799,432.

5

i Date. j Reserve Bank. Trading Banks. Total. (Expressed in New Zealand currency.) (000 omitted.) £ £ £ 29th March, 1937 .. 19,099 15,286 34,385 28th March, 1938 .. 16,930 9,635 26,565 Decrease .. 2,169 5,651 7,820

Percentage Liabilities in New Zealand. of Bankers' Advances Net tijjnVm'WtoToUl Date. and Overseas ,, , Demand and Discounts. Assets. ' Time LiabiliDemand. Time. Total. ties in New Zealand. (000 omitted.) 1937. £ £ £ £ £ £ March 29 .. .. .. 36,898 31,975 68,873 46,954 15,286 12,808 18-6 April 26 .. .. .. 38,519 32,464 70,983 47,485 16,284 14,736 20-8 May 31 .. .. .. 36,667 32,506 69,173 48,033 15,114 14,836 21-4 June 28 .. .. .. 36,053 32,948 69,001 47,711 15,413 14,550 21-1 July 26 .. .. .. 34,825 33,304 68,129 48,171 14,055 14,452 21-2 August 30 .. .. .. 33,699 33,361 67,060 49,476 11,968 14,319 21-4 September 27 .. .. 32,890 33,051 65,941 50,696 10,919 13,299 20-2 October 25 .. .. .. 33,312 32,312 65,624 52,647 10,429 11,923 18-2 November 29 .. .. 32,622 32,337 64,959 54,781 8,180 11,274 17-4 December 27 .. .. 33,575 32,092 65,667 54,002 6,662 13,162 20-0 1938. January 31 .. .. 36,186 31,632 67,818 53,313 6,755 15,323 22-6 February 28.. .. .. 36,476 31,371 67,847 53,460 8,269 13,109 19-3 March 28 .. .. .. 37,006 31,225 68,231 55,837 9,635 10,528 15-4 * Bankers' cash includes balances with Reserve Bank, Reserve Bank notes and coin, but excludes London funds.