be maintained by the state governments were not revised between 1976 and 1999. since 1999, the wma scheme is being worked out on the basis of the recommendations of the b. p. r. vittal committee ( 1998 ). the committee recommended that the minimum balance should be revised and linked to the same base as normal wma which itself is worked out taking into account the sum of revenue receipts and capital expenditure. the first revision after the implementation of the vittal committee formula was effected from april 1, 1999, followed by the next revision from february 1, 2001. the latest revision took effect from april 1, 2002. however, the minimum balances have not been revised since april 1, 1999. a review of the wma scheme will be made in april 2003. automatic debit mechanism the technical committee of state finance secretaries on the state government guarantees has observed that such a mechanism runs the risk of resulting in insufficient funds for financing minimum obligatory payments and other grounds as well. using an automatic recovery mechanism for inviting subscription to bonds issued by autonomous bodies with state government guarantees not only erodes the credibility of the state government, but also would prompt other states to request for such assurance to offer additional comfort for investors. the matter is under the consideration of the reserve bank and the central government. expansion in agency banks at present, the rbi, sbi and nationalised banks conduct business relating to governments. more recently, private banks promoted by the all india financial institutions ( afi ), which meet the defined criteria, are also being considered for induction for conduct of government business. the objective is to help the state governments to get better, quick service with safety of funds. the question is to strike a balance between the two and this may have to be decided by the states with the help of rbi. thus, there can be competition for government business in the future. the reserve bank, being a central bank, for achieving the functional focus, may have to consider in due course, shedding of the retail banking business in relation to governments in favour of the agency banks with a view to ensuring that in the long run, the bank will maintain only the principal accounts of the governments, leaving the day - to - day banking business to the commercial banks functioning as its agents. treasury the treasury system has evolved very gradually over a number of years and has worked with reasonable satisfaction. nevertheless, there is scope for improvement with a view to providing more facilities to the general public in a number of ways. first,

example of a crisis leading to a strengthening of the european system – though the process to create emu – the economic and monetary union, not the european monetary union – began well before the erm crisis. the exchange rate and central banking provisions of the maastricht treaty were introduced on the schedule set out in 1991, with the ecb coming into existence in 1999. until about 2009, the monetary aspects of the plans for the development of the european union ( eu ) seemed to be a major success – but not a sufficient success to persuade all members of the the snake agreement was made among the six original countries of the eec plus another three about to join : denmark, ireland, and the united kingdom. by 1978, the original six members of the eec had been joined by denmark, ireland, and the united kingdom. bis central bankers ’ speeches union to become members of the ecb and adopt the euro, with the most notable standout being the united kingdom. the erm crisis also drove home the need for greater coordination of fiscal policies in the run - up to monetary union. members of the eu agreed to the stability and growth pact in 1996. although, as we all know, the conditions of the pact have not always been observed, nor enforced by brussels, the acknowledgment of the need for a coordinated fiscal policy to complement monetary union was still a step forward – one which may be drawn on in future. what lessons can we draw from this history of the region ’ s economic and monetary responses to earlier crises? do the results bear out the spirit of the statements by monnet and others about each crisis leading to greater strength? certainly, each setback and each crisis spurred policymakers to take steps that they might not otherwise have taken at that time, and the end result of those steps has been a more unified european monetary union. successive crises have not deterred policymakers from the goal of economic integration, but rather seemed to strengthen their belief in the need for it – and that integration is stronger today than it ever was in the past. looking back, the progress in this project from its earliest days after world war ii until today has been impressive. trade integration has led to the free flow of goods within the eu, and this has brought economic gains. greater trade integration has in turn generated a continued desire for greater monetary integration, which was put in place in 1999, and until recently seemed to be a major success. that success in turn made crystal