3- Positive Suggestions for the FutureRegulation of Money (1923)

A sound constructive scheme must provide:

I. A method for regulating the supply ofcurrency and credit with a view to maintaining,so far as possible, the stability of the internalprice level; and

II. A method for regulating the supply offoreign exchange so as to avoid purely temporaryfluctuations caused by seasonal or other in-fluences and not due to a lasting disturbancein the relation between the internal and theexternal price level.

I believe that in Great Britain the idealsystem can be most nearly and most easilyreached by an adaptation of the actual systemwhich has grown up, half haphazard, since thewar.

I. My first requirement in a good con-structive scheme can be supplied merely bya development of our existing arrangementson more deliberate and self-conscious lines.Hitherto the Treasury and the Bank of England have looked forward to the stability of the dollarexchange (preferably at the pre-war parity) astheir objective. It is not clear whether they

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