The third and most important point arises out of the first two. The Indian currency is internally (_i.e._, apart from the import of funds from foreign countries) absolutely inelastic. There is no method whatever by which the volume of currency can be _temporarily_ expanded by some credit device _within_ the country to meet the regularly recurrent seasonal demands of trade. Cheque–using countries meet the difficulty by increasing the volume of credit created by the banks; most note–using countries meet it by the Central Bank’s discounting a greater volume of home bills than usual, and thus increasing its note circulation temporarily, without a corresponding increase in its metallic reserves. Except for a certain proportion of the business which is transacted by cheque (chiefly in the Presidency towns), there is nothing corresponding to this in India. Additional currency, whether notes or rupees, can be obtained in two ways only—by buying Council Bills in London or by bringing in sovereigns. Additional notes or rupees can be obtained in payment of Council Bills or in exchange for sovereigns, but not otherwise. The fact that a temporary increase in the media of exchange can only be obtained by bringing in funds from abroad partly explains the high rate of discount in India during the busy season. This question will be more fully dealt with in Chapter VIII. But the main point can be put briefly thus:—If funds are to be attracted from abroad for a short period (say three months), the rate of interest must be high enough to repay the cost of remittance _both_ ways, which in the case of places so remote from one another as India and London is considerable. If there were some authority which could create credit money in India during the busy season, it would not be necessary for the rate of discount to rise so high. 17. The objections to the existing arrangements largely arise, therefore, out of the absence of a State Bank. This question is further discussed in Chapters VI. and VII. I feel little doubt that India ought to have a State Bank, associated in a greater or less degree with the Government. The Government is drifting year by year into doing more business of an essentially banking character; and as time goes on it will become increasingly objectionable to dissociate some of the functions of modern State Banking from others. But there is a considerable weight of opinion in favour of the view that the time for the establishment of a Central Indian Bank is not yet ripe. In the meantime is any partial remedy possible for the evils dealt with above?