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Dear Waley,
BANK OF ENGLAND,
5th April, 1935.
78
Palestine.
The general lines of the situation as I see it
are as follows:-
There is no Central Bank to influence banking and credit, nor would a Central Bank as yet be appropriate. The Currency Board is a neutral Body with no regulative functions. The big banks cannot be expected to govern the position adequately because they are competitors both among themselves and with the smaller institutions which are the potential source of danger. In these circumstances, and since the situation appears to be one which calls for some extra control, the only remaining instrument is the High Commissioner, and it seems to me that there should be a
considerable tightening up of his control.
As to the methods of doing this:
I would agree
with most of the recommendations of the Local Banking Committee, though I do not feel competent to judge of the merits of certain of the suggestions which deal with factors of which I have no special knowledge. I think the Law relating to banking needs tightening up, especially in the matter of minimum capital, rates of interest on deposits, etc., and that they should have a whole-time Inspector of Banks (with fairly wide powers) who would be the High Commissioner's adviser on these matters. It would probably be an advantage to have also the Advisory Committee to which
reference is made - not to give advice to the High
Commissioner but to the Inspector of Banks.
He could
assist