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Thursday, 9 December 1971
Page: 4634

Mr Hayden n asked the Treasurer, upon notice:

(1)   Has his attention been drawn to a statement in the' August- 1971 issue of Business Indicators, published- by the Australia- and New Zealand Bank, expressing doubt about the . effectiveness of the Government's restrictive monetary- policy, operating principally through control over the trading banks which form only pan of a rapidly expanding financial system, as an inflationary check.

(2)   What is the Government's attitude to this expanding non-official money market.

(3)   Is it the intention of the Government to bring the non-official money market under official control for monetary policy purposes.

Mr Snedden - The. answer to the honourable member's question is as follows:

(1)   Yes.

(2)   The Government is df course Well aware of the substantia] growth which has occurred over recent years not only in the non-official money market but throughout' the whole of' the Australian money .and capital markets. There has been substantial growth in both the number' and size of financial institutions; a variety of new institutions- has been, established and many existing ones have expanded rapidly; the range and diversity of financial claims issued and actively traded in financial, markets have, also been, considerably enlarged. These various developments may be regarded as a natural accompaniment to Australia's economic expansion paralleling -the increase iri the size and range of our industrial and commercial structure. It is of course important that the infra-structure of the financial system should not lag in adapting to growth and development throughout the economy generally.

(3)   This question raises a matter of policy which it is not appropriate to answer in the context of a parliamentary question.

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