During the whole period of the hostilities up to 10th March 1938, the stability of the" currency had been [maintained satisfactorily without any, restriction on operations in Foreign Exchange, for which there was a free market, When, however,—the Federal Reserve Bank was established in the North on 10th March by the "Provisional Government of the Republic of China" and immediately Tssued notes which were not con~ vertible into foreign exchange but which were to be exchanged at par with notes issued by the Banks of the National Government it immediately became necessary for the JNational Government to impose cer= fain restrictions on foreign exchange operations in order to prevent an creased drain on the Foreign Exchange Reserve. In accordance with the National Government decree of 3rd November 1035 notes issued by {he National Government were made legal tender and were convert into foreign exchange at a stabilized par, value, where the Notes, issued By the Federal Reserve Bank with Which the Provisional Government is attempting to replace the National Government notes are inconvertible land are. inadequately supported.
"The Regulations imposed by the National Government restrict the sale fof exchange to legitimate trade and hoped that their imposition will have the effect of preventing an undue drain on the Exchange Reserve and thus enable the National Government to maintain currency stability. The regulations issued leave much bbe desired and place an undue strain fon Exchange bankers as at present allocations are made at only Hankow Jand Hongkong and only once a week. Tt would facilitate matters very considerably for the Bankers and give Increased confidence to the market fore an additional office established Shanghai and were allocations of exchange made daily or even three times a week instead of only once week, and it is hoped that this may be arranged.
In making the allocations of ex-Jchange those in authority' are apparently working on averages of pre vious months and hi iven due Jeonsideration to the abnormal d mand brought about by the accumula tion of imported cargo and severely restricted exports which results in an increased demand for foreign exchange for the adjustment of actual trade. differences.
Text read from the printed page and cleaned; old type leaves the occasional error.