Back Matter

Back Matter

Author(s):
International Monetary Fund
Published Date:
January 1977
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    Notes

    Introduction

    Bengt Broms, The Doctrine of Equality of States as Applied in International Organizations (Helsinki, 1959), pp. 81, 230, and 314; Henry G. Schermers, International Institutional Law (Leyden, 1972), Vol. II, pp. 327-29.

    Schermers, International Institutional Law (cited n. 1), pp. 329-37. See, however, Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972), pp. 204-209 (hereinafter referred to as Gold, Voting and Decisions); and Joseph Gold, “Weighted Voting Power: Some Limits and Some Problems,” American Journal of International Law, Vol. 68 (1974), pp. 696-708.

    Gold, Voting and Decisions, pp. 195-201 and 215-16.

    See Joseph Gold, “Law and Change in International Monetary Relations,” The Record, Association of the Bar of the City of New York (April 1976), pp. 223-38; Joseph Gold, “A Report on Certain Recent Legal Developments in the International Monetary Fund,” Vanderbilt Journal of Transnational Law, Vol. 9 (1976), pp. 223-45.

    Cited n. 2.

    Weighted Voting Power

    Article XII, Section 5, original and first. See also Gold, Voting and Decisions, pp. 17-30.

    Article V, Sections 4 and 5, second, Article XII, Section 5(b), second. See also Gold, Voting and Decisions, pp. 30-43.

    Article XV, Section 2(a), original and first; Article XXVI, Section 2(a), second.

    Article V, Section 5, second.

    Article XXI(a) (ii), second; Schedule D, paragraph 5(b), second. See also Gold, Voting and Decisions, pp. 6-9.

    Article XXXII(a), first, and Article XXX(e), second; Article XXIV, first, and Article XVIII, second.

    Article XII, Section 2(e), second.

    Article XII, Section 3(i)(i) and (iii), second.

    Article XII, Section 3(c), second. See Proposed Second Amendment to the Articles of Agreement of the International Monetary Fund: A Report by the Executive Directors to the Board of Governors (Washington, 1976), Part II, Chap. O, sec. 2(b) and (f). (Hereinafter referred to as Report on Second Amendment.) See also Gold, Voting and Decisions, pp. 55-56.

    Article XII, Section 3(i)(ii), second.

    Article XII, Section 3(i)(iv), second.

    Schedule D, paragraph 3(b), second.

    Schedule D, paragraph 1(a), second.

    Schedule D, paragraph 5(e), second.

    See Gold, Voting and Decisions, pp. 75-84.

    Schedule D, paragraph 3(b), second.

    Ibid. Cf. Gold, Voting and Decisions, pp. 65-67 and 88-89.

    Report on Second Amendment, Part II, Chap. P, sec. 5.

    Statement by the Governor of the World Bank for Nepal, Summary Proceedings of the Twenty-Ninth Annual Meeting of the Board of Governors, 1974 (Washington, 1974), p. 255. (Hereinafter referred to as Summary Proceedings, 19—.)

    See Report of Executive Directors on Increases in Quotas of Members—Sixth General Review, and Resolutions Nos. 30-1 and 30-3, Summary Proceedings, 1975, pp. 283-89, 294, and 298; Resolution No. 31-2, Summary Proceedings, 1976, pp. 295-99.

    Statements by Governors at the Thirtieth Annual Meeting, Summary Proceedings, 1975, pp. 144, 180, and 204-205; Statements by Governors at the Twenty-Ninth Annual Meeting, Summary Proceedings, 1974, pp. 34-35,48, 114, 118, 135-36, 159, 163, 173, 199, 211, and 217.

    Resolution No. 31-2, March 22, 1976, par. 2, Selected Decisions of the International Monetary Fund and Selected Documents, Eighth Issue (Washington, 1976), p. 223. (Hereinafter referred to as Selected Decisions, 8th.)

    The developing members are those included in the group entitled “Less Developed Areas” in International Financial Statistics in contrast to the members classified as “Industrial Countries” and “Other Developed Areas.”

    Members in the following international financial institutions have basic votes plus additional votes proportionate to their financial contributions: African Development Bank (AfDB), Asian Development Bank (AsDB), Inter-American Development Bank (IDB), International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), and International Finance Corporation (IFC). Only the charters of the AsDB and the IDA provide for change in the number of basic votes to reflect increases in membership or in the financial contributions of members. In the AsDB, the number of basic votes is subject to change because the basic votes allotted to each member result from the equal distribution among all members of 20 per cent of the aggregate sum of the basic and proportionate votes of all members. Changes in the total voting strength result from changes in subscriptions or membership. In the IDA, the initial subscriptions of original members, additional subscriptions, and supplementary resources are distinguished. Under the Articles of Agreement of the IDA, the initial subscriptions of original members carry 500 basic votes plus proportionate votes. Initial subscriptions of other than original members and additional subscriptions of all members carry such voting rights as the Board of Governors of the IDA determines. Whenever additional subscriptions are authorized, each member has to be given an opportunity to subscribe an amount that will enable that member to maintain its relative voting strength. Supplementary resources carry no voting rights.

    See Joseph Gold, Membership and Nonmembership in the International Monetary Fund: A Study in International Law and Organization (Washington, 1974), pp. 143-56. (Hereinafter referred to as Gold, Membership and Non-membership.)

    Annual Report of the Executive Directors for the Fiscal Year Ended April 30, 1973 (Washington, 1973), pp. 94-95. (Hereinafter referred to as Annual Report, 19—.) See also Resolution No. 27-12, August 31, 1972, Summary Proceedings, 1972, pp. 357-58, and Annual Report, 1973, p. 95. The report to the Governors is referred to and is the basis of Chap. O, sec. 2(a), of Part II of Report on Second Amendment.

    Expansion of Number of Decisions Requiring Special Majorities

    Article XII, Section 5(c), second. See also Gold, Voting and Decisions, pp. 117-18. A majority of the votes cast suffices, provided that the requirement of a quorum is observed. A quorum for any meeting of the Board of Governors is a majority of the Governors having not less than two thirds of the total voting power (Article XII, Section 2(d), second). See also By-Laws, Section 13(c). A quorum for any meeting of the Executive Board is a majority of the Executive Directors having not less than one half of the total voting power (Article XII, Section 3(h), second). See also Article XXI(a)(i) and (ii), second, and Gold, Voting and Decisions, pp. 54 and 118-20. (All references in this pamphlet to the By-Laws and the Rules and Regulations are to the versions of them as at the end of April 1977.)

    See Gold, Voting and Decisions, pp. 123-54.

    The 39 provisions were tabulated in the “Annex to Commentary on Proposed Amendment: Special Majorities,” in Part II of Report on Second Amendment. The annex is reproduced as an appendix to this pamphlet, and within the pamphlet will be referred to simply as the Annex to the Commentary.

    Sec. VII(3) of Joint Statement by Experts on the Establishment of an International Monetary Fund of the United and Associated Nations (April 21, 1944), reproduced in The International Monetary Fund, 1945-1965: Twenty Years of International Monetary Cooperation, ed. by J. Keith Horsefield (Washington, 1969), Vol. III, p. 134. (Hereinafter referred to as History, 1945-65.)

    See Reply to Question 35 of Questions and Answers on the International Monetary Fund (June 10, 1944), reproduced in History, 1945-65, Vol. Ill, pp. 181-82.

    Gold, Voting and Decisions, p. 124.

    Article XXIII, Section 1, second, Article XXVII, Section 1, second.

    Article XXVI, Section 2, second.

    Article V, Section 12(j), second.

    Article XII, Section 1, second.

    Article XII, Section 8, second.

    Article XXIX(b), second.

    Article III, Section 2(a), second; Article XVIII, Section 2(a) and (c), second.

    Article XII, Section 3(b) and (d), second.

    Article IV, Section 3, second.

    Article V, Section 3, second.

    Article VIII, Section 2(a), second.

    Article V, Section 4, second.

    Article V, Sections 3(d) and 7(i), second.

    Article XXX(f), second.

    U.S. National Advisory Council on International Monetary and Financial Policies, Special Report to the President and to the Congress on Amendment of the Articles of Agreement of the International Monetary Fund and on an Increase in Quotas in the International Monetary Fund (Washington, April 1976), p. 20.

    Decisions Subject to Special Majorities: Reasons for Selection

    Article III, Section 2, second.

    See n. 36.

    Gold, Membership and Nonmembership, pp. 157-68.

    Ibid., pp. 28-29, 175, and 397-99.

    Article II, Section 2, second; Report on Second Amendment, Part II, Chap. B, sec. 1.

    U.S. Congress, House, Committee on Banking, Currency and Housing, Subcommittee on International Trade, Investment and Monetary Policy, and Joint Economic Committee, Subcommittee on International Economics, Hearings, International Monetary Reform and Exchange Rate Management, 94th Cong., 1st Sess., July 17, 18, and 21, 1975 (Washington, 1975), pp. 130, 133, 135, 148, 204, and 219; Economic Report of the President Transmitted to the Congress, January 1976 (Washington, 1976), p. 147.

    See par. 11 of the Rambouillet Declaration, issued on November 17, 1975 at the close of the six-power economic summit (IMF Survey, Vol. 4 (1975), p. 350); House Hearings on International Monetary Reform, 1975 (cited n. 58), pp. 147-48 and 236.

    Article IV, Section 4, second.

    Schedule C, paragraphs 2 and 8, second.

    Article IV, Section 2, second.

    Special Report on Amendment of Articles and Increase in Quotas (cited n. 52), p. 23.

    Schedule D, paragraph 1(a), second.

    Schedule D, paragraph 3(c), second, under which the Council may not take any action that is inconsistent with any action taken by the Board of Governors, and the Executive Board may not take any action that is inconsistent with any action taken either by the Board of Governors or the Council. See Report on Second Amendment, Part II, Chap. P.

    This assumption was made in par. 41 of the Outline of Reform; see International Monetary Reform: Documents of the Committee of Twenty (Washington, 1974), p. 22. (Hereinafter referred to as Documents of Committee of Twenty.)

    See par. 8 of the communiqué of the Intergovernmental Group of Twenty-Four on International Monetary Affairs, Tenth Meeting, Paris, June 9, 1975: “On the proposal to establish a Council, Ministers agreed that such a decision could not be taken now, but only after further experience had been gained with the Interim Committee, and by an 85 per cent majority of the total voting power.”—IMF Survey, Vol. 4 (1975), p. 180.

    Article XXVIII, second. The effectiveness of an amendment is not the result of a decision by the Fund in the sense in which that term is used in this pamphlet. Effectiveness is the result of the decisions of individual members to accept a proposed amendment.

    See, for example, Article XII, Section 3(d), original, Article XXVI, Section 3, first; Article V, Section 8(a), second.

    Joseph Gold, “The Amendment and Variation of Their Charters by International Organizations,” Revue Belge de Droit International, Vol. 9 (1973), pp. 50-76.

    Article V, Section 7(c), second, provides that repurchase shall begin three years and be completed not later than five years after a purchase. These periods may be varied for all members.

    Article V, Section 9(a), second, provides that the Fund may pay remuneration on the amount by which the percentage prescribed under Section 9(b) or (c) exceeds the Fund’s average daily balances of a member’s currency held in the General Resources Account other than balances acquired under a policy on the use of the Fund’s resources that has been the subject of an exclusion under Article XXX(c), second. Section 9(b) of Article V, second, prescribes the percentage, and Section 9(c), second, provides that the Fund may vary it as described in the provision. See Report on Second Amendment, Part II, Chap. G, particularly sees. 4 and 5.

    Schedule C, paragraph 5, second, provides that the margins shall be 4½ per cent, or such other margin or margins as the Fund may adopt by a special majority.

    See, for example, par. 8 of the communiqué of the Intergovernmental Group of Twenty-Four on International Monetary Affairs, Twelfth Meeting, Kingston, Jamaica, January 7, 1976: “There was strong support among Ministers in favor of an enabling clause for a gold substitution account in the amended Articles of Agreement.”—IMF Survey, Vol. 5 (1976), p. 28. Par. 7(f) of the communiqué of the Interim Committee, January 8, 1976, declared: “The Executive Directors should continue their consideration of the subject of a substitution account without delaying completion of the comprehensive draft amendment.”—IMF Survey, Vol. 5 (1976), p. 19.

    Article XII, Section 1, and Schedule D, second.

    Article IV, Section 4, and Schedule C, second.

    Article XX, Section 4, original, had some similarity to the two powers in the second amendment in that it authorized the Fund to notify members that it would shortly be in a position to begin exchange transactions and that they should communicate par values. When the notice was given, provisions relating to the initial determination of par values began to apply. A special majority was not required for the decision to give the notice. Article XX, Section 4, original, in contrast to the powers of the Fund with respect to the Council and to par values under the second amendment, was based on the understanding that the Fund would necessarily give the notice at some time. The discretion was as to timing only.

    See Joseph Gold, “The ‘Dispensing’ and ‘Suspending’ Powers of International Organizations,” Netherlands International Law Review, Vol. 19 (1972), pp. 189-90.

    Article XVI, original.

    Annual Report, 1974, pp. 55-56; Decisions Nos. 4078-(73/102) S, November 5, 1973, and 4145-(74/6) S, February 1, 1974, ibid., pp. 103 and 109.

    Article XXIII, Section 1, second, Article XXVII, Section 1, second.

    Article V, Section 12(j), second; Article XII, Section 6(f)(vi), second.

    Article XII, Section 2(g), second. See also Article XIX, Section 1(a), second.

    See Gold, Voting and Decisions, pp. 137-41.

    Cf. Reply to Question 15 of Questions and Answers (cited n. 36), History, 1945-65, Vol. Ill, pp. 153-54.

    Article XIX, Sections 2(c) and 1(b), second. The origin of Section 1(b) is the action that was taken to permit transfers of SDRs under Article XXV, Section 2(b)(i), first, in return for currency on the basis of a par value or central rate instead of “equal value” under Article XXV, Section 8(a), first. For this purpose it was necessary to suspend the operation of the latter provision in part (see n. 80). Suspension would not be necessary under the second amendment.

    Article V, Section 12(f)(ii), second. Under this provision the Fund would be able to make balance of payments assistance available on special terms to developing members. For this purpose the Fund is directed to take the level of per capita income into account.

    See Report on Second Amendment, Part II, Chap. I, sec. 1.

    Article V, Section 12(b)–(f), second. See also Report on Second Amendment, Part II, Chap. I.

    See J.J. Polak, Some Reflections on the Nature of Special Drawing Rights, IMF Pamphlet Series, No. 16 (Washington, 1971), pp. 4-7; Joseph Gold, Special Drawing Rights: The Role of Language, IMF Pamphlet Series, No. 15 (Washington, 1971), pp. 11-25.

    Article XXV, Section 6, first; Joseph Gold, Special Drawing Rights: Character and Use, IMF Pamphlet Series, No. 13, 2d ed. (Washington, 1970), pp. 67-71.

    Article XIX, Section 6, second; Report on Second Amendment, Part II, Chap. Q, sec. 2(xiii).

    Article XII, Section 6(f), second.

    Article V, Section 9, second.

    Article XVIII, original. See also Joseph Gold, Interpretation by the Fund, IMF Pamphlet Series, No. 11 (Washington, 1968).

    The decisions of the Committee on Interpretation are the only decisions of the Fund that are taken without weighted voting power. See Gold, “Weighted Voting Power” (cited n. 2), pp. 696-99.

    Article XVIII(b), first; Article XXIX(6), second. See Gold, Voting and Decisions, pp. 204-207; Joseph Gold, The Reform of the Fund, IMF Pamphlet Series, No. 12 (Washington, 1969), pp. 57-61.

    Article III, Section 1, second.

    Article V, Section 2(a), second.

    Article I(v), second; Article V, Section 3(a), second.

    Article V, Section 3(b), second.

    Article V, Section 7, second; Report on Second Amendment, Part II, Chap. E.

    Article V, Section 7(c), second.

    Article V, Section 7(c), (d), and (g), second.

    See address by William B. Dale, Deputy Managing Director of the Fund, to the Washington Chapter of the Society for International Development, February 17, 1976, IMF Survey, Vol. 5 (1976), pp. 66-67.

    Article VIII, Section 7, second; Article XXII, second.

    Article VII, Section 1(ii), second.

    Ibid.; Article XIX, Sections 4 and 5, second.

    Article II, Section 2, second; Report on Second Amendment, Part II, Chap. B, sec. 1.

    Article V, Section 7(i), second.

    Article V, Section S(b)–(e), second.

    See Report on Second Amendment, Part II, Chap. F, sec. 12.

    See Gold, Membership and Nonmembership, pp. 41-43.

    Reserve tranche is defined in Article XXX(c), second.

    Article V, Section 3(c), second.

    Article III, Section 4(a), first.

    Article III, Section 3(d), second.

    Article V, Section 8(b)–(e), second.

    Article V, Section 6, second.

    Article V, Section 8(c), original; Rules and Regulations, Rule I-4.

    Article V, Section 8(e), original.

    Article V, Section 8(d), second.

    Gold, Reform of Fund (cited n. 97), pp. 23-25.

    Cf. the misuse of the word “restitution” to describe the decision to sell 25 million ounces of the Fund’s gold to members at the official price under the Articles as they stand before the second amendment; see par. 6(3) of the communiqué of the Interim Committee, August 31, 1975, IMF Survey, Vol.4 (1975), p. 265. “Restitution” conveys the fallacious impression of a return to rightful owners.

    Article XXVI, Section 3, second; Schedule J, second.

    Article XXVII, Section 2, second; Schedule K, second.

    Article V, Section 9(a), first.

    Article XXVI, Sections 1, 2, and 3, first.

    Article XXVI, Section 3, first.

    Article XIX(j), first.

    Article XX, Section 3, second.

    Article V, Section 9, second.

    Par. 10 and Annex 2 of the Outline of Reform, in Documents of Committee of Twenty, pp. 11 and 28-30.

    See Joseph Gold, “The ‘Sanctions’ of the International Monetary Fund,” American Journal of International Law, Vol. 66 (1972), pp. 740-51; Joseph Gold, “‘Pressures’ and Reform of the International Monetary System,” Journal of International Law and Politics, Vol. 7 (1974), pp. 425-30.

    Article XII, Section 8, second.

    Gold, “‘Pressures’ and Reform” (cited n. 134), pp. 448-49.

    Article XV, Section 2(b), original and first; Article XXVI, Section 2(b), second.

    See Gold, Membership and Nonmembership, pp. 340-41, 367, and 481.

    Article XXIX, Section 2(b), first; Article XXIII, Section 2(b), second.

    Article XXIX, Section 2(a), first; Article XXIII, Section 2(a), second.

    Article V, Section 5, second.

    Article XV, Section 2(a), first; Article XXVI, Section 2(a), second.

    Article XXVI, Section 2(b), second.

    Article XIV, Section 3, second; Article XIX, Sections 2(d) and 3(b), second.

    Article VII, Section 3, second.

    Gold, “Sanctions” (cited n. 134), pp. 758-59; Gold, “‘Pressures’ and Reform” (cited n. 134), pp. 449-54.

    Article V, Section 8(e), original; Rules and Regulations, Rule I-4(g).

    Article V, Section 8(c), second.

    Article V, Section 8(e), original; Article V, Section 8(c) and (d), second.

    Article XII, Section 6(a), second.

    Article XII, Section 6(b), original; the preferential distribution was 2 per cent per annum. Article XII, Section 6(b), first; the preferential distribution was the amount by which 2 per cent per annum exceeded the remuneration that had been paid for the year. See Gold, Reform of Fund (cited n. 97), pp. 25-26.

    Article XII, Section 6(c), second.

    Report on Second Amendment, Part II, Chap. L, sees. 1-7.

    Article V, Section 12(f)(i), second.

    Article V, Section 12(g), second; Article XII, Section 6(f)(ii), second. No investment can be made without the concurrence of the member whose currency is used to make the investment; Article XII, Section 6(f)(iii), second.

    Article XII, Section 3(b), original and first.

    Article XII, Section 3(d), original and first.

    Article XII, Section 3(c), original and first.

    Article XII, Section 3(b), original and first.

    Resolution No. 27-10, July 26, 1972, par. 1(a), Documents of Committee of Twenty, pp. 229–30, and Summary Proceedings, 1972, p. 354.

    Resolution No. 29-8, October 2, 1974, par. 1(a), Selected Decisions, 8th, p. 209, and Summary Proceedings, 1974, p. 365.

    Resolution No. 29-9, October 2, 1974, par. 1(c) and (d), Selected Decisions, 8th, p. 213, and Summary Proceedings, 1974, p. 369.

    Schedule D, paragraph 1(a), second.

    Report on Second Amendment, Part II, Chap. O, sec. 2(a).

    Article XII, Section 3(b), second.

    Report on Second Amendment, Part II, Chap. O, sec. 2(a).

    Article XII, Section 3(b), second.

    Special Majorities: Proportions of Total Voting Power

    Article XII, Section 5(c), second.

    See Gold, Voting and Decisions, pp. 121-22.

    See Gold, Special Drawing Rights (cited n. 91), pp. 22-23.

    Article III, Section 2, first.

    Article XVIII(b), first.

    See Gold, Voting and Decisions, pp. 120-21.

    Report on Second Amendment, Part II, Chap. N, sec. 2.

    Article XV, Section 2, second.

    Article XXVII, Section 1(c), second.

    Article XXVI, Section 2(b), second.

    See Gold, Voting and Decisions, pp. 157-61.

    Article IV, Section 7, original.

    Article IV, Section 7, first.

    See Gold, Voting and Decisions, pp. 160-61.

    See ibid., pp. 165-67; Resolution No. 31-2, March 22, 1976, par. 2, Selected Decisions, 8th, p. 223.

    Article V, Section 7(c) and (d), second.

    Article V, Sections 3(d) and 1(e) and (i), second.

    See par. 7(b), IMF Survey, Vol.4 (1975), p. 179.

    Par. 7(c), ibid. See also a statement by the U.S. Secretary of the Treasury: “The U.S. quota share will decline from 22.93 to 21.53 percent of total, and our voting share will drop from 20.75 to 19.96 percent of total. Since the U.S. vote is dropping below 20 percent, the United States accepted this reduction within the framework of an increase from 80 to 85 percent in the vote needed for major Fund decisions.”—U.S. Congress, House, Committee on Banking, Currency and Housing, Subcommittee on International Trade, Investment and Monetary Policy, To Provide for Amendment of the Bretton Woods Agreements Act, Hearings on H.R. 13955, 94th Cong., 2d Sess., June 1 and 3, 1976 (Washington, 1976), p. 19.

    “The proposed quota increases of all IMF members will reduce the U.S. voting share from 20.75 per cent to 19.96 per cent. The effective U.S. veto power over amendments to the IMF Articles, and over certain other basic decisions within the IMF Articles, and over certain other basic decisions within the IMF, will be preserved, because the majority required for these decisions will be increased, under the amended Articles, from the present 80 to 85 per cent.”—U.S. Congress, House, Committee on Banking, Currency and Housing, Report Together with Dissenting Views (To Accompany H.R. 13955), Report No. 94-1284, 94th Cong., 2d Sess., June 21, 1976 (Washington, 1976), p. 6.

    See par. 5 of the communiqué of the Interim Committee, January 16, 1975, IMF Survey, Vol. 4 (1975), p. 18.

    Article III, Section 2, first.

    Article XII, Section 3(b), original.

    Article XVI, Section 1(c), original.

    Article V, Section 8(a), first; Article XXV, Section 7(f) and (g), first; Decision No. 3414-(71/98) G/S, September 10, 1971, Selected Decisions, 8th, p. 178.

    Article XII, Section 6(a), original.

    Article XXVI, Section 3, first.

    Article V, Section 8(a) and (d), second; Article XII, Section 6(d), second; Article XX, Section 3, second.

    Article V, Section 7(c), (d), (e), and (g), second.

    Article XV, Section 2, second.

    Article XV, Section 2(b), original; Article XXVI, Section 2(b), second.

    Article XII, Section 8, second.

    Article V, Section 8(e), original and first; Article V, Section 9, first; Article V, Sections S(d) and 9(a), second.

    Article XXV, Section 6(b), first; Article XIX, Section 6(b), second.

    Article IV, Section 7, first; Schedule C, paragraph 11, second.

    See Report on Second Amendment, Part II, Chap. C, sec. 13.

    Article XVI, Section 1(a), original; Article XXIX, Section 1, first.

    Article XXIII, Section 1, second; Article XXVII, Section 1(a), second.

    Cf. Art. 62(1) of the Agreement on an International Energy Program, done at Paris, November 18, 1974, which became effective on January 19, 1976 (International Legal Materials, Vol. 14 (1975), pp. 1-35, at p. 26).

    Special Majorities: Choice of Proportions of Total Voting Power

    Article XVI, Section 1, original.

    Article III, Section 2, original.

    Article XII, Section 3(b), original.

    Article XVII(a), original. Acceptance of a proposed amendment by all members was required for modifications relating to the three provisions set forth in Article XVI 1(b), original. The purpose of unanimous acceptance was to establish the three provisions as safeguarded provisions. See Gold, “Weighted Voting Power” (cited n. 2), pp. 695-96.

    See, for example, U.S. Congress, Senate, Committee on Banking and Currency, Bretton Woods Agreements Act, Hearings on H.R. 3314, 79th Cong., 1st Sess., June 12-16, 18-22, 25, and 28, 1945 (Washington, 1945), pp. 15,43-44, 54, 126-29, 370, 373, and 380-81; U.S. Congress, House, Committee on Banking and Currency, Bretton Woods Agreements Act, Hearings on H.R. 2211, 79th Cong., 1st Sess., March 7-9, 12-16, and 19-23, 1945 (Washington, 1945), pp. 55-56, 146-47, 212, 220, 348-49, 549, and 944. See also address by Edward E. Brown at the University of Chicago: “Furthermore, if, as is certain to be the case, the American dollar is the currency most in demand, the knowledge on the part of the other countries that the United States can withdraw if its viewpoint is flouted by the management should practically insure recognition of our viewpoint.”—Reproduced in ibid., p. 212.

    Article XVI, Section 1(c), original.

    Article V, Section 8(e), original.

    Article XII, Section 8, original.

    Article VII, Section 3, original.

    See E. M. Bernstein, “Scarce Currencies and the International Monetary Fund,” Journal of Political Economy, Vol. 53 (1945), pp. 1-14 (reproduced in Senate Hearings on Bretton Woods Agreements Act, 1945 (cited n. 211), pp. 621-32).

    Article XVI, Section 1(d), original.

    Except to a limited extent and for the limited purposes of the adjustment of voting power under Article XII, Section 5(b)(i), original. See Gold, Voting and Decisions, pp. 33-34.

    Gold, Voting and Decisions, pp. 134-35.

    These decisions will be subject to a majority of 85 per cent. Article V, Section 12, second; Article XII, Section 1, second.

    Subject to one exception and one qualification. See Report on Second Amendment, Part II, Chap. N, sec. 2, and pp. 31-32 and 35 of this pamphlet.

    It is interesting to recall the following colloquy between Mr. Dean Acheson, Assistant Secretary of State, and Representative Frederick C. Smith in House Hearings on Bretton Woods Agreements Act, 1945 (cited n. 211), p. 220:

    “Mr. Smith: How many states, beside the 43 included in the proposed fund setup, do you expect will come in later?

    “Mr. Acheson: I have no expectation. I assume that after the war the neutral countries will apply for membership, and amounts have been reserved for future applicants, and their applications would be considered upon the merits we made.

    “Mr. Smith: That amounts to $1,200,000,000, does it not?

    “Mr. Acheson: Yes; in the fund, and $900,000,000 in the bank.

    “Mr. Smith: Do you know the reduction in our voting power that would take place if these quotas were added?

    “Mr. Acheson: I cannot give you those figures.

    “Mr. Smith: It would be substantial, would it not?

    “Mr. Acheson: No; I should think not.

    “Mr. Smith: Would you consider 3 or 4 or 5 percent substantial?

    “Mr. Acheson: No.”

    Schedule B, paragraph 6, second.

    Article V, Section 7(c) and (d), second.

    Article V, Section 7(c) and (g), second.

    Article V, Section 1(b), (h), and (i), second.

    Article V, Sections 8(b), (c), and (d) and 9(a), second.

    For example, Article XXIV, Section 4(d), first.

    Article III, Section 2, first; Article IV, Sections 7 and 8(d), first.

    Article III, Section 2, original; Article IV, Sections 7 and 8(d), original.

    Article V, Sections 8(6), (c), and (d) and 9(a), second; Article XX, Section 3, second. It was also argued that the majority of 70 per cent should apply to decisions to change the method of valuation of the SDR because that majority had been adopted for decisions to determine the rate of interest on the SDR. The two were related, it was argued, as determinants of the effective yield on the SDR. On yield, see J.J. Polak, Valuation and Rate of Interest of the SDR, IMF Pamphlet Series, No. 18 (Washington, 1974), pp. 18-20. Note that the decisions to adopt the basket method of valuation of the SDR and to vary the rate of interest on holdings of SDRs were taken on the same day (Decisions Nos. 4233-(74/67)S and 4236-(74/67)S, June 13, 1974, Annual Report, 1974, pp. 116-19), and that frequent, small, equiproportional increases in the amounts of each currency in the basket have been proposed as an alternative to increases in the rate of interest (Documents of Committee of Twenty, p. 44).

    Article XVII, Section 3(i), second.

    Article III, Section 3(a) and (d), second.

    Article III, Section 2(c), second.

    Article II, Section 2, second.

    Article XII, Section 3(b), second.

    Classification of Decisions Subject to Special Majorities

    See Polak, Valuation and Rate of Interest of SDR (cited n. 231), pp. 1-16; Outline of Reform, Annex 9, in Documents of Committee of Twenty, pp. 43–45; Decision No. 4233-(74/67)S, June 13,1974 (as amended July 1,1974), Annual Report, 1974, pp. 116-17. See also Resolution No. 29-10, par. 6 on Valuation of the Special Drawing Right, Selected Decisions, 8th, p. 220, and Summary Proceedings, 1974, p. 375.

    Charter of the United Nations, Article 18 (2).

    See Schermers, International Institutional Law, Vol. II (cited n. 1), p. 351.

    Article XV, Section 2, second. See also Report on Second Amendment, Part II, Chap. Q, sec. 1, and pp. 31 and 34 of this pamphlet.

    Article V, Section 7(c), (d), (e), and (g), second.

    Article XVIII, Sections 3 and 4(a) and (d), second.

    Article XXIV, Section 4(d), first.

    See Gold, Voting and Decisions, pp. 138-39.

    Cumulative Decisions

    Article XIX, Section 5, second.

    Article XIX, Section 2(b), second.

    Article XIX, Section 7(a), second.

    Annual Report, 1974, pp. 103-105 and 108-109.

    Article XIX, Section 7(b), second.

    Distribution of Powers Subject to Special Majorities

    Article XVI, Section 1(d), original.

    Article XII, Section 8, original.

    Article V, Section 8(e), original.

    Article XII, Section 3(a), original; By-Laws, Section 15.

    Article XII, Section 3(a) and (g), original.

    Article V, Section 9(a), first.

    Article XXIX, Section 1, first.

    Article XXVII, Section 1(c), second.

    Article XII, Section 3(a), second; Schedule D, paragraph 3(a), second.

    By-Laws, Section 15.

    Effect of Special Majority

    Article V, Section 12(c) and (e), second.

    Schedule B, paragraph 7, second.

    Article V, Section 8(e), original and first.

    Article V, Section 8(c), original and first.

    Article XII, Section 3(b) (iii) and (iv), original and first.

    Article XII, Section 3(b) (ii), second.

    Article XII, Section 3(b) and (c), second.

    Article XII, Section 3(b), second; Report on Second Amendment, Part II, Chap. O, sec. 2(c) and (d).

    Schedule B, paragraph 6, second.

    Report on Second Amendment, Part II, Chap. S, sec. 3.

    Article V, Section 8(b) (ii), second; Report on Second Amendment, Part II, Chap. F, sec. 7.

    Proposals to Limit Special Majorities

    Article IV, Section 2(c), second.

    Under the Treaty Establishing the European Economic Community (Treaty of Rome, March 25, 1957), the Council can take decisions only by “unanimous vote” but this requirement is eliminated for most decisions after certain periods or at certain stages and is replaced by the requirement of a “qualified majority.” The present qualified majority is 41 of the 58 votes of the present nine members of the European Communities if the decision is proposed by the Commission, or 41 votes cast by at least six members in other circumstances. See Articles 20, 33(8), 43(2), 54(2), 56(2), 57(1) and (2), 63(2), 69, 75(1), 87(1), 101, 111(3), 112(1), and 114.

    The Treaty Establishing a Free Trade Area and Instituting the Latin American Free Trade Association (Montevideo Treaty), signed at Montevideo, Uruguay, February 18, 1960, provides that, during the first two years after the treaty takes effect, decisions of the Conference, the supreme organ of the Association, shall be taken by the affirmative votes of at least two thirds of the Contracting Parties provided that no negative vote is cast, and that the Contracting Parties shall determine the voting system after the two-year period (Art. 38). The proviso that there should be no negative vote did not apply to three categories of decision set forth in Art. 38. The Conference decided, pursuant to Art. 38, after the two-year period had expired, that the Contracting Parties “shall establish, to the extent considered necessary,” further categories to which the proviso should not apply.—Resolution 68(111), Voting System at the Lafta Conference, adopted at the Third Meeting of the Conference.

    Sec. 1(c) of Art. VI of the Agreement Establishing a Financial Support Fund of the Organization for Economic Cooperation and Development, Paris, April 9, 1975 (International Legal Materials, Vol. 14 (1975), pp. 979-1005, at p. 987).

    See Gold, Voting and Decisions, p. 135.

    Par. 7(d) of the communiqué of the Interim Committee, January 8, 1976, IMF Survey, Vol. 5 (1976), p. 19.

    Article XII, Sections 2(b) and 3(a), original and first.

    Article XII, Sections 2(b) and 3(a), second; Schedule D, paragraph 3(a), second.

    Article III, Section 3(d), second.

    Article XVII, Section 3(ii) and (iii), second.

    Article III, Section 2(c), second.

    Article XVII, Section 3(i), second.

    Some General Reflections

    Proposals for an International Currency (or Clearing) Union, February 11, 1942, par. 15, History, 1945-65, Vol. III, p. 6.

    Exchange between Mr. Dean Acheson, Assistant Secretary of State, and Senator Robert A. Taft:

    “Senator Taft: Well, the point I suggest is that all these safeguards are not compulsory safeguards written into the act. They are things that are in the discretion of this board.

    “Mr. Acheson: There cannot be compulsory safeguards, Senator Taft. I was talking with a banker, for instance, down here at some meeting which you attended, and we illustrated the point this way. I said, ‘suppose you were very ill and not expected to recover, and you were the president of a great bank, and they said, ‘No; we are not going to tell you who your successor is going to be, but we want you to write out some things here which will enable him to run this bank as successfully as you have. I won’t tell you who he is; it doesn’t make any difference. You just give us the rules as to how to run this thing.’ I said, ‘Would that make your last hours happy?’

    “And he said, ‘No. Of course that’s crazy.’

    “There are no rules that you write out as to how to run a banking institution successfully. If there were, bank examiners could do it. It requires management and intelligence.

    “Now, if you think that the people who are elected here will not use intelligence on this thing or will not operate it the way it is supposed to be operated to be successful, then of course it will be a failure, and I cannot possibly argue against that.”—Senate Hearings on Bretton Woods Agreements Act, 1945 (cited n. 211), p. 44.

    “You say that the provisions are so broad that there is room for differences of opinion. Precisely. And any attempt to formulate a set of principles under which any international organization of the character of the fund can operate will be futile unless we realize that such an organization has to have principles which are broadly stated, has to have principles which permit some flexibility of decision according to the specific case.”—Mr. Acheson, ibid., pp. 127-28.

    Ibid., p. 54.

    Cf. n. 284.

    “The United States strongly supported the proposals to establish the Council and the Interim Committee…. The availability of such a forum is particularly welcome in view of the less than comprehensive nature of the agreed reforms and the need for a high level of international cooperation in dealing with the exceptional problems of the current situation.”—U.S. Treasury Department, Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1974 (Washington, 1974), pp. 42-43. Later, the view was advanced that the provisions on exchange arrangements at least contained “the essential elements of a balanced, realistic, and workable system, monitored by the IMF.”—House Hearings on Amendment of Bretton Woods Agreements Act, 1976 (cited n. 186), p. 10.

    Reproduced from Proposed Second Amendment to the Articles of Agreement: A Report by the Executive Directors to the Board of Governors (Washington, 1976).

    IMF Pamphlet Series: International Monetary Fund Pamphlet Series

    (All pamphlets have been published in English, French, and Spanish, unless otherwise stated)

    *1. Introduction to the Fund, by J. Keith Horsefield. First edition, 1964. Second edition, 1965. Second edition also in German.

    *2. The International Monetary Fund: Its Form and Functions, by J. Marcus Fleming. 1964. In English only.

    3. The International Monetary Fund and Private Business Transactions: Some Legal Effects of the Articles of Agreement, by Joseph Gold. 1965.

    4. The International Monetary Fund and International Law: An Introduction, by Joseph Gold. 1965.

    *5. The Financial Structure of the Fund, by Rudolf Kroc. First edition, 1965. Second edition, 1967.

    6. Maintenance of the Gold Value of the Fund’s Assets, by Joseph Gold. First edition, 1965. Second edition, 1971.

    7. The Fund and Non-Member States: Some Legal Effects, by Joseph Gold. 1966.

    8. The Cuban Insurance Cases and the Articles of the Fund, by Joseph Gold. 1966.

    9. Balance of Payments: Its Meaning and Uses, by Poul Høst-Madsen. 1967.

    *10. Balance of Payments Concepts and Definitions. First edition, 1968. Second edition, 1969.

    11. Interpretation by the Fund, by Joseph Gold. 1968.

    12. The Reform of the Fund, by Joseph Gold. 1969.

    13. Special Drawing Rights, by Joseph Gold. First edition, 1969. Second edition, with subtitle Character and Use, 1970.

    14. The Fund’s Concepts of Convertibility, by Joseph Gold. 1971.

    15. Special Drawing Rights: The Role of Language, by Joseph Gold. 1971.

    16. Some Reflections on the Nature of Special Drawing Rights, by J.J. Polak. 1971.

    17. Operations and Transactions in SDRs: The First Basic Period, by Walter Habermeier. 1973.

    18. Valuation and Rate of Interest of the SDR, by J.J. Polak. 1974.

    19. Floating Currencies, Gold, and SDRs: Some Recent Legal Developments, by Joseph Gold. 1976. Also in German.

    20. Voting Majorities in the Fund: Effects of Second Amendment of the Articles, by Joseph Gold. 1977.

    21. International Capital Movements Under the Law of the International Monetary Fund, by Joseph Gold. 1977.

    22. Floating Currencies, SDRs, and Gold: Further Legal Developments, by Joseph Gold. 1977. Concluding section also in German.

    23. Use, Conversion, and Exchange of Currency Under the Second Amendment of the Fund’s Articles, by Joseph Gold. 1978.

    24. The Rise in Protectionism, by Trade and Payments Division. 1978.

    25. The Second Amendment of the Fund’s Articles of Agreement, by Joseph Gold. 1978.

    26. SDRs, Gold, and Currencies: Third Survey of New Legal Developments, by Joseph Gold. 1979. Concluding section also in German.

    27. Financial Assistance by the International Monetary Fund: Law and Practice, by Joseph Gold. First edition, 1979. In English only. Second edition, 1980.

    28. Thoughts on an International Monetary Fund Based Fully on the SDR, by J.J. Polak. 1979.

    29. Macroeconomic Accounts: An Overview, by Poul Høst-Madsen. 1979.

    30. Technical Assistance Services of the International Monetary Fund. 1979.

    31. Conditionality, by Joseph Gold. 1979.

    32. The Rule of Law in the International Monetary Fund, by Joseph Gold. 1980.

    33. SDRs, Currencies, and Gold: Fourth Survey of New Legal Developments, by Joseph Gold. 1980.

    34. Compensatory Financing Facility, by Louis M. Goreux. 1980.

    35. The Legal Character of the Fund’s Stand-By Arrangements and Why It Matters, by Joseph Gold. 1980.

    36. SDRs, Currencies, and Gold: Fifth Survey of New Legal Developments, by Joseph Gold. 1981.

    37. The International Monetary Fund: Its Evolution, Organization, and Activities. First edition, 1981. Fourth edition, 1984.

    38. Fund Conditionality: Evolution of Principles and Practices, by Manuel Guitián. 1981.

    39. Order in International Finance, the Promotion of IMF Stand-By Arrangements, and the Drafting of Private Loan Agreements, by Joseph Gold. 1982.

    40. SDRs, Currencies, and Gold: Sixth Survey of New Legal Developments, by Joseph Gold. 1983. In English. French and Spanish in preparation.

    41. The General Arrangements to Borrow, by Michael Ainley. 1984. In English. French and Spanish in preparation.

    42. The International Monetary Fund: Its Financial Organization and Activities, by Anand G. Chandavarkar. 1984. In English. French and Spanish in preparation.

    43. The Technical Assistance and Training Services of the International Monetary Fund. In English. French and Spanish in preparation.

    44. SDRs, Currencies, and Gold: Seventh Survey of New Legal Developments, by Joseph Gold. 1987.

    *Out of print. Photographic or microfilm copies of all English editions, including numbers that are out of print, may be purchased direct from University Microfilms International, 300 North Zeeb Road, Ann Arbor, Michigan 48106, U.S.A., or, for those living outside the Western Hemisphere, from University Microfilms Limited, 30/32 Mortimer St., London, WIN 7RA, England.

    Copies (unless out of print) may be requested from:

    External Relations Department, Attention: Publications

    International Monetary Fund, Washington, D.C. 20431, U.S.A.

    Telephone number: 202 623-7430

    Cable address: Interfund

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