11.   Banks may choose a different liquidity ratio.

12.   They may simply go ahead and expand credit, and accept a lower liquidity ratio.

13.   In the past, the Bank of England has required banks to hold a certain liquidity ratio and has specified those assets that were to count as liquid.

14.   If banks choose to hold a lower liquidity ratio, they will have surplus liquidity.

15.   The banks have tended to choose a lower liquidity ratio over the years, and certainly a lower cash ratio.

16.   The liquidity ratio, however, has now been reduced, since bonds are regarded as illiquid.

17.   It is the inverse of the liquidity ratio.

18.   Banks find that they have a higher liquidity ratio than they need.

19.   The authorities could impose statutory minimum reserve requirements on the banks to prevent them choosing to reduce their liquidity ratio and choosing thereby to create more credit.

20.   Should a statutory liquidity ratio be imposed on the banks, or should the banks be allowed to choose whatever ratio they consider to be prudent?