On the one hand the policy of advances may introduce into the Indian Money Market a serious element of weakness,—an element, perhaps, inseparable from a system where there is no central banking authority and where the currency authority stands, normally, outside the money market. It is not the business of the Government to hold any of the reserves which the bankers ought to hold. But if the Government does, in fact, for another purpose hold large reserves in its hands, and if it is believed that it will in case of extreme necessity come to the market’s rescue, the bankers may tend to keep somewhat lower reserves than they ought, and than they otherwise would. We have over again the situation which has long existed, to its detriment, in the United States. There, as in India, the Government, with immense currency reserves of gold, is normally aloof from the money market. There also they have no central banking authority. The expectation that the Government will bring some of its gold to the rescue in extreme circumstances, has always been said to exert an enervating influence on the banks themselves in the matter of the precautions they take for times of crisis. The ultimate solution probably lies in the establishment of a Central Bank for India which shall be the Government Bank and shall hold the banking and currency reserves at the same time.[73] In the meantime, in spite of this consideration, the Government will not, I think, be able to resist the pressure on them in a crisis to come to the assistance of the market. Indeed, I do not know that they ought to resist it. It would be absurd to have large reserves in hand, and not to use them to avert a general calamity. The awkwardness of the situation is intrinsic, and cannot be avoided so long as the present divorce is maintained between the banking and the currency authorities. The plans of the Government ought, therefore, to be laid accordingly.