I have been asked if I have any suggestion for organizational changes that might serve to improve the formulation of monetary policy. To avoid the necessity of writing a treatise on monetary theory and policy and on the instruments of monetary control certain assumptions and statements of factors will be made: (1) While there may exist some difference of opinion on the causes or origin of inflation, there is general agreement that double-digit inflation is always accompanied by an expansion of money in excess of the rate of growth of production. (2) There is general agreement that chronic high inflation contributes not only to social injustice but is also detrimental to economic growth. (3) With the exception of the periods 1950-1953 and 1967-1972, excessive inflation has occurred in Colombia in the past 40 years. (4) If money is defined as means of payment in the form of efectivo [currency] outside banks and cuentas corrientes [current accounts], it is possible to control its volume. Undesired increases in efectivo can be offset by the control over cuentas corrientes, which comprise 70 percent money as defined. Similarly, an undesired rate of increase in the income velocity of circulation of means of payment (say of 3 percent per year) can be likewise offset by a lowered rate of growth in means of payment. (5) It follows then, that in a certain sense, the "monetary authorities" have been and are responsible for monetary emission. (6) Various reasons may be cited for the fact that monetary control has not been effective in preventing chronic inflation. The focus of this paper is whether organizational changes might be expected to improve control.
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