Saturday, September 15, 2007

If the commercial and financial community is short of cash, all that it



has to do is to go to the Bank of England and borrow a few millions, and
the only effect on the Bank"s position is an addition of so many
millions to its holding of securities and a similar addition to its
deposits
If the commercial and financial community is short of cash, all that it
has to do is to go to the Bank of England and borrow a few millions, and
the only effect on the Bank"s position is an addition of so many
millions to its holding of securities and a similar addition to its
deposits. It may sometimes happen that the borrowers may require the use
of actual currency, and in that case part of the advances made will be
taken out in the form of notes and gold, but as a general rule the Bank
is able to perform its function of providing emergency credit by merely
making entries in its books.