After the events of the Asia Minor disaster the policy of domestic borrowing through banknotes (paper money) issued by the National Bank of Greece expanded. The government of the "Revolution of 1922" (Plastiras-Gonatas) signed in October 29, 1922 a contract with the National Bank of Greece and increased the circulation of banknotes by 600,000,000 drachmae. The additional circulation used government bonds as collateral and resulted in the rise of inflationary pressures, since it was not accompanied by corresponding taxation measures.
The rate of the British pound, which was equivalent to 284 drachmae in October 1922, reached 410 drachmae a month later. The precipitous fall in the value of the drachma created fiscal problems in the public sector in a period of extensive import activity to cover shortages in the armed forces and the needs of the refugees. Until December, when Georgios Kofinas was appointed minister of Finance, the capital loaned by the National Bank of Greece had almost been used up. By combining salary increases, taxation and further borrowing, Kofinas succeeded in restraining the course of the drachma. As a result, the value of the pound dropped from 429 drachmae in March to 387 drachmae in May. By the legislative decree of April 23, 1923 the National Bank of Greece was given the permission to buy foreign exchange by issuing banknotes anew, thus creating for the state an exchange reserve of 2,588,000 pounds. The austerity and retrenchment policy of Kofinas facilitated the contracting of a foreign refugee loan and the payment of all public obligations for the year 1923. The increase of regular revenues under the Plastiras-Gonatas government due to new taxation measures and foreign loans contracted in 1922-23, explains the creation of surplus.