For this purpose, we should start with the proposed district banks. At the start these banks should have the full amount in bullion and coin, to meet all the paper issues. Issues of paper by the district banks should be the thin end of the wedge in introducing sane credit into the country. For a time, until both the new coins and the notes are freely accepted by the people at their face value, it is absolutely necessary that the banks should make no further extensions of credit in this direction. This process is indeed costly, because unlike the case of well-established issuing banks, the capital available for the banks would be limited. I do not wish it to be understood that in any well regulated state, the issuing banks or the Government do not have the full amount of their note issues covered; but the cover is not all in bullion or coin. For instance, in India, a good portion of what is mentioned as gold reserves is lent out on short loans or invested in gilt-edged securities. At the beginning, China would perforce have to do without such an advantage, because such process, at the start, might lead to distrust in the new currency, both paper and metallic. When once the people have accepted the new currency and when there is not the slightest danger, in normal times, of a run for obtaining metallic money, then the reserves might be utilized for other purposes. At the same time, the capital of the district banks might also be increased. When starting, as I have pointed out already, it is not wise to start with a big amount of capital; nor is it possible to obtain very big amounts at the outset, as the native banks would have to furnish, under my scheme, two-thirds of the capital. It would, of course, be even better in the future not to increase capital and to utilize a large portion of the profits for the purposes of reserves. When the period for adding to the reserves arrives, then these banks might take a hand in the regulation of foreign exchange. As with every addition to the reserve, the note circulation would also be increased by the same amount, the main object should be to meet the whole of the notes whenever and wherever they are presented. Therefore, the principle on which the reserves are built up should remain unchanged. Still, however, when the confidence in the new issues is built up there is no reason why the addition to the reserves should not be of further service to the people and the Government.