which was at that time already practically available in the hands of the Bank of England, the currency note department and of the other banks—and that until this amount had been reached and maintained concurrently with a satisfactory foreign exchange position for at least a year, the policy of reducing the un-covered note issue as and when opportunity offered should be consistently followed; that the currency note issue should be finally replaced by a Bank of England issue, but not until the future dimensions of the fiduciary issue had been ascertained; that during the transitional period the issue should remain a Government issue, but new notes should be issued, not against Government securities, but against Bank of England notes; and furthermore that when opportunity arose for providing cover for existing un-covered notes, Bank of England notes should be used for this purpose also. Demands for new currency would then fall in the normal way on the banking department of the Bank of England. Finally, when the fiduciary portion of the issue had been reduced to an amount which experience showed to be consistent with the maintenance of a central gold reserve of £150,000,000, the outstanding currency notes should be retired and replaced by Bank of England notes of low denomination.
