asked the Minister for Finance whether the Central Bank does in fact per se or per alios (a) control the amount of hire purchase credit made available to the community and (b) sell or buy Government securities on the stock exchange or otherwise; and whether such operations affect the total money supply within this country referred to in his answer to the question of 4th February, 1969 regarding total money supply.
Ceisteanna—Questions. Oral Answers. - Central Bank Activities.
50.
The Central Bank does not control the amount of hire purchase credit made available to the community. The Minister for Finance, however, has power under Section 6 of the Hire Purchase (Amendment) Act, 1960, to prescribe minimum deposits, maximum periods of payment and the amount and frequency of instalments or rental payments on goods. Such restrictions, which have the effect of reducing the volume of hire purchase transactions and thus affecting hire purchase credit, have only been imposed by the Minister with the advice of the Central Bank when it was clear that demand was excessive.
As regards the second part of the Deputy's question, while the Central Bank has over the years bought or sold Government securities and thus affected the money supply, the Bank does not normally engage in such activities to control the supply of money. As stated in my reply to the Deputy's question on 4th February, 1969, in practice, the Central Bank influences the money supply mainly by the issue of guidelines to the banks on the level of credit.
Perhaps the Minister has overlooked part of my question which states "and whether such operations affect the total money supplies within this country referred to in his answer to the question of 4th February, 1969, regarding total money supplied."
They do.
I agree with the Minister but there are those who would not agree with either of us. Would the Minister, in the light of this astonishing agreement, direct the attention of other financial institutions in the country to this remarkable phenomenon?
I hope I have made my views clear. Naturally, the buying and selling of these securities by the Central Bank would affect the total volume of the money available, but it is not an operation which we have ever availed of. The Deputy is quite right that the buying specifically for this purpose or selling of these securities per se affects the total supply of money.
Does the Minister also agree that fluctuations in the availability of hire purchase do, in effect, affect the total money supply, albeit that the current accounts were mentioned in his answer to the question of 4th February as being the principal element which are, undoubtedly, in some degree, affected by the rise and fall in total hire purchase contracts outstanding? Is not that an additional effect on the total amount of money supplies?
I can do no better than to repeat what one of my illustrious predecessors, Dr. James Ryan, said about this whole matter. It is a very complicated affair.
I never thought I would hear that answer from the present Minister for Finance. From Dr. James Ryan it was the very answer I would have expected. He never knew anything and he had the best method of concealing that fact of any Minister who ever sat in this House.
He did not make any mistakes, all the same.
You are an incurable cynic. I never heard one man call another man a bloody fool so subtly. Undoubtedly, that is the answer of a B.F., as the Minister well knows.