Between the end of 1958 and the end of 1967, sterling deposits with banks in Great Britain other than the clearing and Scottish banks rose from under £1,000 million to over £3,000 million, while their sterling lending to the domestic private sector rose by some £800 million (20% of the total increase in such bank lending). Because these banks have played a rapidly growing part in the extension of credit in sterling to private customers at home and to borrowers abroad, the authorities found it necessary to bring them within the scope of the quantitative limit on the growth of bank lending requested in the spring of 1965. Later, in the spring of 1967. when it became possible to release the clearing and Scottish banks from their obligation to observe a quantitative limit, it was thought inappropriate to take the same step for the other banks. For the clearing and Scottish banks the system of Special Deposits which was first brought into operation in 19601 was available as a reinforcement of guidance given by the Bank. No such alternative was available for the other banks and, as announced in the Budget speech of April 1967, it was necessary to work out suitable new arrangements for them, before they could be released from the quantitative limit.
Control of bank lending - the Cash Deposits scheme