Reserve Bank of India. Report on Currency and Finance for the Year 1947-48

The monetary measures adopted by the Board of Governors of the Federal Reserve System comprised the unpegging of the Treasury bill rate to control the monetisation of public debt the raising of the bank rate from 1 per cent to 1 per cent in January 1948 arid the raising of the reserve requirements of banks in Central Reserve Cities. [...] This continued increase is probably due to the rising incomes and the persisting shortages of consumer and capital goods on the market although the success of the conversion of industry to a peacetime basis and the drive towards the restoration of the pre-war channels of exports resulted in a marked increase in the percentage of bank advances to deposits. [...] The Chairman of the Board of Governors of the Federal Reserve System recommended inter alia the intrduction of a system of secondary reserves applicable to commercial banks ; and the Brazilian Government (in the Bank Reform Bill introduced in the Parliament) proposed the flotation of semi-public banks with half of their capital subscribed by the Government. [...] The principal reasons reported for the retreat of the market in that country were the fuel crisis the rather low level of savings foreign selling prior to the suspesion of convertibility and the declaration by the Chancellor of the Exchequer of his desire to consolidate the cheap money rather than push it further this helping to take away the bullish fervour of the market. [...] The impact of the above on the Government bond market was felt in the last quarter of the year when prices started declining the decline being accentuated on the one hand by the sharp rise in the volume of new corporate financing which was more attractive to investors and on the other by the considerable amount of uncertainty regarding the support policies of the Federal Reserve Banks.