ABSTRACT
In the analysis of efficiency in the domestic money supply, it is empirically reasonable and theoretically convenient to regard the use of currency by the public and in the reserves of commercial banks as a rather minor facet of the monetary system, and the problems of efficiency associated with the non-payment of interest on currency as secondary to the problem of efficiency in the supply and use of deposit money created by banks. In the international monetary system, however, the ‘currency’ – monetary gold reserves – bulks large by comparison with the ‘deposits’ – the reserve currencies of sterling and the dollar and drawing rights of countries in the International Monetary Fund. (IMF drawing rights are of course not strictly speaking deposits, but they can be more readily assimilated to deposits than to currency, since their creation requires the use of credit.)
