INDEPENDENT NEWS

Reserve Bank’s ‘unconventional Tools’ Are Conventional Elsewhere

Published: Wed 11 Mar 2020 01:00 PM
Yesterday’s announcement by Reserve Bank governor Adrian Orr that the bank would consider ‘unconventional tools’ like buying government bonds, would come as a shock to the governors of the central banks in Canada, Japan and China.
Finance Ministers in those countries have accessed funding from their central banks at zero interest for years.
The Bank of Japan has purchased approximately 50 per cent of government issued bonds, and the Chinese central bank has funded the bulk of China’s massive international Belt and Road infrastructure programme as well as regularly buying government bonds - US$151 billion in February alone.
Canada’s central bank purchases approximately 20 percent of government bonds issued every year on a regular basis.
If the NZ government financed its borrowing through the Reserve Bank it could save taxpayers $5 billion every year - money saved on interest payments on the borrowing it does from commercial banks and other financial institutions.
That $5 billion could then be spent on health services, solving the housing crisis by building rent to own homes, providing free dental care, or a multitude of other possibilities.
Currently government is effectively taking $5 billion off taxpayers every year and giving it to overseas bank shareholders and investors.
Central banks buying government bonds used to be a common occurrence. The first Labour government financed the building of thousands of state houses with Reserve Bank money.
The Commonwealth Bank (Australia’s central bank at the time) supplied the Australian government with funding for major infrastructure development.
Commercial banks create money every time they grant a loan – to individuals to buy houses, to businesses, or to the government.
This has been confirmed by leading figures in the banking industry like Mervyn King, former governor of the Bank of England, and Graham Towers, former governor of the Bank of Canada, as well as local commentators like Bernard Hickey, Bryan Gaynor, Raf Manji, Shamubeel Equab, and Bryan Gould.
The country’s central bank, the Reserve Bank, also has that power, so if it’s good enough for Canada, Japan, and China, then Grant Robertson should be using it to benefit New Zealanders.

Next in New Zealand politics

Statement From Police Commissioner Mike Bush Following Guilty Pleas In Operation Deans Prosecution
By: New Zealand Police
Nation Steps Up To COVID-19 Alert Level 2
By: New Zealand Government
Cabinet Approves Business Continuity Package In Response To COVID-19
By: New Zealand Government
Record transport investment in Draft GPS 2021
By: New Zealand Government
On The Loss Of Abortion Safe Zones
By: Gordon Campbell
On The Oil Price Smackdown, And On National’s Fatuous Crusade Against Red Tape
By: Gordon Campbell
Predator Free 2050 Strategy - Expert Reaction
By: Science Media Centre
Land, Air And Sea: Regions To Benefit From NZ Upgrade
By: New Zealand Government
Statement On Guilty Plea Of March 15 Terrorist
By: New Zealand Government
Christchurch mosque attacks: Gunman pleads guilty to all charges
By: RNZ
PM on mosque attacks anniversary: 'A year on gives us a chance as a nation to reflect'
By: RNZ
Dunne Speaks: Nothing Much Has Changed Since March 15
By: Peter Dunne
Statement On Guilty Plea
By: Royal Commission of Inquiry into Attack on ChCh
Guilty Plea By Accused In Christchurch Mosque Attacks
By: Islamic Women's Council of New Zealand
Life In Prison Looms For Australia's Christchurch Gunman, Now NZ's First Convicted Terrorist
By: The Conversation
View as: DESKTOP | MOBILEWe're in BETA! Send Feedback © Scoop Media