Aspects of quantitative advance control 1956-1964 with particular reference to the target system

Abstract

The aim of this thesis is to examine the usefulness of the target system of quantitative advance control; in other words, to determine how well a policy of setting targets for advances works in conjunction with reserve ratio changes. The first part of the treatise explains why central banks need new monetary weapons; it considers the nature and types of ceiling techniques in use and it deals with their application in France, West Germany and the United Kingdom. In the next section the operation of the New Zealand target system from June 1956 to March 1964 is described; the actions which trading banks take to control advances and the problems faced by them in meeting targets are then discussed; the effectiveness of the target scheme is assessed; and finally, some suggestions to make it operate more efficiently are made. The work done in preparation has consisted largely in interpreting official banking statistics in the light of comparatively-recent monetary history. Where advance targets have not been published, and most have not been circulated outside the banks, the necessary figures have been obtained from the confidential records of the Reserve Bank and one trading bank. Relevant articles and reports are assembled in this study, while interviews with Reserve Bank officials and with executives of one trading bank have been another important source of information.