Reserve Bank of India. Report of the Central Board of Directors for the Year Ended June 30 1952

4. The rapid depletion in the sterling area resources was due partly to the fall in the dollar earnings of the dependent territories and partly to the high level of imports by some members of the area to meet the demands of rearmament. [...] In the United Kingdom in the course of his speech in the House of Commons on November 8 1951 the Chancellor of the Exchequer announced that he had in consultation with the Governor of the Bank of England come to the conclusion that it was necessary to depart from the arrangment then in force under which in practice the Bank rate was ineffective and the Bank of England supplied the needs of [...] The rise in the Bank rate would not by itself have had the effect of increasing the degree of control Change in exercised by the Reserve Bank on the supply of Open Market money and credit in the system had the Reserve Operations Bank continued to buy Government securities in the open market as readily as it had done in the previous busy season. [...] The immediate effects of the new monetary policy were thus a hardening of the structure of interest rates The Banking and a stoppage of the automatic expansion of System and liquidity in the system through the Reserve Monetary Control Bank's purchases in the open market. [...] Consequent on the passing of the Reserve Bank of India (Amendment) Act which came into force on November 1 1951 the Scheduled Banks Regulations framed in terms of section 58(2)(o) of the Reserve Bank of India Act 1934 were revised incorporating the liberalised rules in regard to remittances in favour of the scheduled banks and the enlarged scope of the facilities hitherto available to the bank