Australia Yearbook - 2001

Chapter 26—Financial system 911
26.42 GOVERNMENT DEBT SECURITIES OUTSTANDING—1901 and 2000
1901
1901 1901
2000
$b (2000
£m
prices)(a)
%
$b
%
By domicile
Overseas 185 17.6 86 1.5 2
Australia 31 2.9 14 82.8 98
Total 215 20.5 100 84.3 100
By original term to maturity
Less than 1 year 8 0.8 4 5.8 67
1 year or more 207 19.8 96 78.5 93
Total 215 20.5 100 84.3 100
(a) Pounds converted to dollars by multipying by two (2) and by CPI changes.
Source: Various ABS publications and other sources.
2000
Implied bank lending margins were of the order
of 3.5 percentage points in 1901 and
4.0 percentage points in 2000. With inflation of
about 1.4% per year in 1999, real interest rates
were close to nominal rates; for example the
real interest rate for small business borrowing
was about 7.5%. In 1901 inflation was running
at about 9% (see table 28.5 in the section
Long-term price series in Chapter 28, Prices),
and real interest rates were probably negative.
The $A has depreciated against both US dollar
and GB pound, and the GB pound has also
depreciated against the US Dollar.
Money and the payments system
In the early days of the colonies, transactions
were made using rum, wheat, tobacco and other
items as well as money—which included
Spanish dollars as well as English pounds and
other currencies. There were also Commissariat
store receipts and promissory notes issued by
private individuals. The nature of these
instruments, their reliability, and their
accessibility to the public led to the Bank of
NSW being allowed to issue notes; it was
followed, eventually, by other private trading
banks.
At the time of Federation, an Australian
currency did not exist, although the debate
about the introduction of a decimal system of
currency was already occurring. Coinage was
minted by the British Government (quite a
profitable sideline) and notes were issued by
individual banks, except in Queensland where
Treasury notes were issued into circulation by
the State Government. However, these bank
notes, and Treasury notes, were not legal in any
State other than the State in which they were
issued.
The modern measures of the volume of money
in 1901 and 2000 are shown in table 26.44.
Measures of the volume or supply of money are
defined as follows:
M1, which was defined as currency in
circulation plus current account deposits at
banks;
M2, which added in the fixed deposits at
trading banks; and
M3, which included all other deposits at
banks.
26.43 PRICES IN FINANCIAL MARKETS—1901
and 2000
1901 2000
Interest rates
Deposits % p.a.
Saving bank/cash management 2.88 3.65
Trading bank/fixed 6 month 3.00 4.80
Overdrafts/small business % p.a. 6.50 8.85
Government bonds/5 year bonds
p.a. 3.34 6.05
Share prices (index value) 9.18 3115.9
Exchange rates $A=
GB Pound 0.4937 0.4094
US Dollar 2.4127 0.6547
Source: Various ABS publications and other sources.