ABSTRACT
In the 1960s concern was expressed that the British (and Australian) overdraft system of bank lending, under which customers were given the right to overdraw their accounts up to an agreed limit, weakened central bank control of money supply, then still the centrepiece of monetary policy. The unused part of the customers’ limits is an addition to their liquidity as good as cash but free of charge. The article (here reprinted without the lengthy statistical section) proposed a commitment fee to limit undue accumulation of unused limits.
