I still support it. All along, though, I have the following observations and reservations. That should not be a big problem in normal times, except for the ideological purists or linguistic perfectionists. However, the specie flow mechanism, now officially a passive one, has backfired because international speculators have manipulated it to push up interest rates and to short-sell in the local stock and futures markets. Specie flow leads to a rise in interbank interest rates, which depresses stock prices and futures.
Interest rates move even higher.
Not Adopted To redress, the AEL model with a deposit reserve system will go a long way in alleviating the interest rate impact of a speculative currency attack. Firstly, there is no need for government intervention in the spot market as currency arbitrage through the electronic media prevents any bank from quoting a deviant rate. Forward speculation, on the other hand, will have much diffused impact on the RTGS system. Theoretically, the clearing balance in the RTGS system, which is used only for settlement purposes, should approach zero, if there were perfect information and liquidity management efficiency on the part of banks were maximum. In reality, the clearing balance could be either positive or negative, and erring with a size of a few billions or a few tens of billions.