Wednesday, February 28, 1973
Specified liquid assets as a percentage of total deposits fell
from 53 per cent to 46 per cent, but this was still well above the
statutory minimum of 25 per cent.
A substantial proportion of the increase in advances of $5,900
million was for trading on the stock exchanges and to finance land and real
estate transactions.
"Partly as a result of this expansion of bank credit, prices of
shares and property have been driven up to very high levels," the Financial
Secretary said.
Referring to "the somewhat frenetic activity" on the stock exchanges
and in the real estate market, Mr. Haddon-Cave said this had not had "a great
deal of effect on the normal workings of the economy."
Good Performance
The consumer price index increased by five per cent in 1972, only
1 per cent more than in 1971, the same as the increase in 1969 and one per cent
less than in 1970.
Mr. Haddon-Cave described this as a "good performance" as consumer
prices were heavily influenced by imports, especially food imports and
considering that it took place over a period that saw the Smithsonian settlement
of exchange rates and the floating of sterling.
He added a word of caution.
While he could see no evidence that the manufacturing or any other
sector of the economy was being hindered by a shortage of credit facilities,
he would not wish to sound "complacent about the implications of some aspects of present trends for the longer term growth prospects of the economy."
/On the