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Updated: Aug 20, 2021

A practice of the British clearing banks prior to 1946, in which, in their half-yearly balance sheets, their cash ratio was shown to be substantially higher than it was at other times of the year. At the time, the banks wished to show that their cash ratio wasabout 11 per cent although they normally operated at nearer to 8 per cent. To achieve the desired figure for the purpose of their accounts, the banks temporarily called in money at call and short notice from the money market. In fact, an 8 per cent operating cash ratio was quite adequate, and since 1946 the published figures have reflected this.

Reference: The Penguin Dictionary of Economics, 3rd edt.


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