Anglo-New Zealand Financial Relations, 1945-61
Financial History Review, Vol. 5, No. 2, 1998, pp. 139-157, 1998
Posted: 18 Dec 2009
Date Written: 1998
Abstract
During the 1930s and 1940s, New Zealand seemed to achieve a large measure of financial independence from Britain, as a result of the establishment of a central bank, the wartime rise in sterling balances, and the aversion of politicians to official overseas borrowing. During the 1950s, however, New Zealand’s financial dependence on Britain increased and became highly politicized. Although official loans were needed for development purposes, they could not be obtained from the World Bank due to New Zealand’s refusal to join the Bretton Woods institutions. New Zealand also began to borrow to overcome short term crises. Uncompromising full employment policies were leading to an overheated economy and chronically weak balance of payments. New Zealand governments turned to Britain for short and long term capital, reinforcing the close economic ties between the two countries.
Keywords: Financial relations, Central bank, Financial dependence, Britain, New Zealand, Bretton Woods, Government policy, Capital
JEL Classification: N20, N24, N27
Suggested Citation: Suggested Citation