The recent war has had the effect of reducing the liquidity of bank assets the world over. Forced by the government or by popular pressure to facilitate the financing of the war, the banks bought large quantities of government securities, they loaned heavily on pledges of government securities, and in certain countries they bought stocks in different enterprises. The result today is that their earning assets consist unduly of long-term forms of paper and of short-term paper secured by long-term bonds.

Commercial banking capital has been diverted to financial operations to an undesirable degree. As the situation when the central banks are laden with non-liquid assets is particularly undesirable, the recovery of their former liquidity will be one of the major aims of commercial banks during the coming decade.