Reserve Bank of Australia Annual Report – 1971 Public Statements

Summarised here are public statements on policy matters which were issued by the Bank during 1970/71.

Finance for housing (23 July 1970)

In the course of its contacts with savings banks, trading banks, and life offices, the Reserve Bank asked these institutions to maintain, and in the case of savings banks, to the extent practicable to increase, the volume of their housing loans in coming months. This action followed a falling-off in dwelling approvals by local government authorities and indications of a decline in housing commencements.

Term and farm development lending (29 September 1970)

Further transfers were made to the Term Loan Funds and Farm Development Loan Funds of the major trading banks. These aggregated about $63 million of which $31 million was transferred to Term Loan Funds and $32 million to Farm Development Loan Funds, bringing the resources of these Funds to $358 million and $119 million respectively.

Approximately two thirds of the aggregate amount of transfers was to come from banks' statutory reserves and the balance from their other assets. The Statutory Reserve Deposit ratio for the banks was reduced from 10 per cent to 9.4 per cent effective 29 September 1970 and transfers from banks' other assets were to be completed by the end of December 1970.

Trading bank deposit facilities (7 December 1970)

Approval was given for the extension from two to four years of the fixed deposit facilities offered by trading banks. The maximum interest rate payable by trading banks on fixed deposits was increased by 1 per cent to 6.5 per cent per annum.

Bank for International Settlements (30 December 1970)

The Reserve Bank accepted an invitation to become a member of the Bank for International Settlements. The Bank agreed to take up an issue of shares, involving an investment of $2.3 million.

Trading bank liquidity (14 April 1971)

The Statutory Reserve Deposit ratio of the major trading banks was reduced from 9.4 per cent to 8.9 per cent with effect from 15 April 1971.

The reduction was a technical step designed to avoid unwarranted tightness developing in banking liquidity and bank lending. It did not represent an easing of the current policy of monetary restraint.