1.   What we have been describing here is a total currency flow surplus.

2.   Under a fixed exchange rate a currency flow surplus is likely to persist for some time.

3.   The net effect will be to eliminate the currency flow surplus.

4.   Under a totally free floating rate, total currency flow surpluses will be eliminated by an appreciation of the exchange rate.

5.   The government can take deliberate steps to offset the monetary effects of currency flow surpluses or deficits.

6.   A multiplied process of money expansion will occur just as in the case of a total currency flow surplus outlined above.

7.   Finally, if there is a currency flow surplus and hence a net inflow of funds from abroad, this too will increase the money supply.

8.   Total currency flow surpluses will only occur if the government keeps the exchange rate below the equilibrium by continuing to sell the domestic currency on the foreign exchange market.