- International Monetary Fund
- Published Date:
- January 1976
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 H0st-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 H0st-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.
*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
See Joseph Gold, “The Legal Structure of the Par Value System,” in Law and Policy in International Business, Vol. 5 (1973), pp. 155–90.
In this pamphlet, references to the Fund’s Articles of Agreement, including references to the “present” or “existing” Articles, are to the Articles of Agreement before the proposed second amendment becomes effective, unless specifically stated otherwise. In a footnote, reference to an article followed by the word “amended” in parentheses is to a provision of the proposed second, amendment.
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, March 1976), Part II, Chap. C, sees. 3–4 and 13. (Hereinafter referred to as Report on Second Amendment.) Article IV, Section 2(a) and (b) (amended).
Before August 15,1971, the Canadian dollar floated from September 30,1950 to May 2, 1962 and from May 31, 1970; the deutsche mark from September 30 to October 26, 1969 and from May 9, 1971; and the Netherlands guilder from May 9, 1971. Experiences such as these led the drafters of various instruments to deal with the consequences of floating. See, for example, Joseph Gold, “The Fund Agreement in the Courts—XI,” Staff Papers, Vol. 22 (1975), pp. 215–21; Merkur-Aussenhandels-GmbH v. Commission of the European Communities (Case 43/72), Court of Justice of the European Communities, Reports of Cases Before the Court, No. 7 ( E.C.R.), p. 1055.
Article IV, Section 4(b).
See Joseph Gold, Maintenance of the Gold Value of the Fund’s Assets, IMF Pamphlet Series, No. 6, 2d ed. (Washington, 1971), pp. 20–21 and 51; International Monetary Fund, Manual of Procedures: Operations and Transactions in Special Drawing Rights (Washington, 1970), pp. 8 and 29–30.
See Report on Second Amendment, Part II, Chap. I, sees. 1–4. See also press communiqué of the Interim Committee of the Board of Governors, August 31, 1975, par. 6, in IMF Survey, Vol. 4 (1975), p. 265; Outline of Reform, pars. 2(d) and 24, in International Monetary Reform: Documents of the Committee of Twenty (Washington, 1974), pp. 8 and 15. (Hereinafter referred to as Documents of Committee of Twenty.)
Article IV, Section 1(a). The weight is 0.888 671 gram of fine gold.
Article IV, Sections 3 and 4.
See “Guidelines for the Management of Floating Exchange Rates” (memorandum attached to Decision No. 4232-(74/67), June 13, 1974), Commentary: General, par. (i), in Selected Decisions of the International Monetary Fund and Selected Documents, Seventh Issue (Washington, 1975), p. 26. (Hereinafter referred to as Selected Decisions.) Also in Annual Report of the Executive Directors for the Fiscal Year Ended April 30, 1974, p. 114. (Hereinafter referred to as Annual Report, 19—.)
Annual Report, 1975, pp. 23–31.
These members are Burma, Guinea, Iran, Jordan, Malawi, Qatar, and Saudi Arabia. See Andreas S. Gerakis, “Pegging to the SDR,” Finance and Development, Vol. 13, March 1976, pp. 35–38.
This article does not attempt to deal with the numerous changes in regulations and practices that have occurred as the result of floating. For example, Franz Aschinger, Economic Adviser to the Swiss Bank Corporation, in a speech before the Anglo-Swiss Society in London on October 9, 1975, described as follows the efforts of the Swiss monetary authorities to stop the appreciation of the floating Swiss franc and, if possible, to depreciate it: “Drastic restrictions on capital imports such as interest prohibition and negative interest rates on foreign deposits, a temporary investment stop for foreign owners, liberation of capital exports and an obligation of foreign borrowers to convert their Swiss francs into dollars with the Central Bank, controls of foreign exchange transactions of the banks by limiting the authorized total sum of forward sales of Swiss francs by the banks, the obligation of the banks to notify important foreign exchange transactions to the monetary authorities and the obligation by the banks to daily equalize their foreign currency positions, high minimum reserves on foreign deposits and finally official interventions at the foreign exchange market in order to support the dollar.”
Article XXI, Section 2.
See fn. 8 above.
At the moment (April 1976), all but 8 of the 128 members of the Fund are participants in the Special Drawing Account.
Article XXIX, Section 1.
See John Williamson, “Need for Solution to Valuation of SDRs Has Grown with Wider Use of Floating,” IMF Survey, Vol. 3 (1974), pp. 40–41.
See J. J. Polak, Valuation and Rate of Interest of the SDR, IMF Pamphlet Series, No. 18 (Washington, 1974); 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, paragraph 6 on Valuation of the Special Drawing Right, Selected Decisions, p. 191.
Annual Report, 1974, p. 117.
See Appendix E of this pamphlet.
The par value of the U.S. dollar on these four dates was US$1 = SDR 0.828948, which is equivalent to SDR 1 = US$1.20635.
See David Cutler, “The Valuation of the SDR,” Euromoney, August 1974, pp. 27–31; David S. Cutler and Dhruba Gupta, “SDRs: Valuation and Interest Rate,” Finance and Development, Vol. 11, December 1974, pp. 18–21; IMF Survey, Vol. 3 (1974), p. 235, and Vol. 4 (1975), p. 280.
M. van den Adel, “How Stable Is the New SDR?” Euromoney, October 1974, pp. 30–33.
Even if there is no express reference to the Articles, provisions may have been entered into on the basis of implied reliance on the Articles or exchange arrangements consistent with the Articles. (Cf. Carsten Smith, “Legal Principles in Monetary and Credit Policy,” in Scandinavian Studies in Law, 1974, Vol. 18 (Stockholm, 1974), p. 224.)
See Annual Report, 1951, p. 40; Annual Report, 1962, pp. 58 ff.; The Role of Exchange Rates in the Adjustment of International Payments: A Report by the Executive Directors (Washington, 1970), pp. 76–77; Gold, “The Legal Structure of the Par Value System” (cited fn. 1), pp. 176–77.
Note, however, the curious concept of the unauthorized change. The concept is discussed in detail in Joseph Gold, “Unauthorized Changes of Par Value and Fluctuating Exchange Rates in the Bretton Woods System,” American Journal of International Law, Vol. 65 (1971), pp. 113–28.
The artificial results of the legal position can be illustrated by the following data with respect to the currencies of a few members selected at random:
|Par Value||Units per SDR|
|on April 30, 1975|
|Grams of gold||Units per||on Basis of|
|Member||per unit||SDR||Valuation of SDR|
|Germany, Fed. Rep.||0.242806||3.66000||2.95214|
Article IV, Section 1(b).
Article IV, Section 8.
This problem is not the only one that may arise in connection with these legal provisions. Some members of the Fund have never established par values for their currencies.
European Transport Law, Vol. 9 (1974), pp. 701–10.
“Bei der Berechnung der Haftungssumme ist von dem Wert auszugehen, der im Zeitpunkt der Eröffnung des Verteilungsverfahrens der Parität der Deutschen Mark zum Gold zugrunde liegt” (Bundesgesetzblatt, Teil I, Nr. 56 (June 27, 1972), p. 967).
See Appendix A of this pamphlet.
The court referred to six European countries, but there were eight in all: Belgium, Denmark, France, the Federal Republic of Germany, Luxembourg, the Netherlands, Norway, and Sweden. There were, however, six currencies involved: the Luxembourg franc was not included, and France left the “snake” on January 19, 1974.
Par values have been established in the recent past, although infrequently and only for special reasons, such as the adoption of a new peg to a currency. For example, initial par values were established by Oman (IMF Press Release No. 74/35, IMF Survey, Vol. 3 (1974), p. 212) and by the United Arab Emirates (IMF Press Release No. 74/15, IMF Survey, Vol. 3 (1974), p. 66) during 1974, and changes in par value were made by Israel (IMF Press Release No. 74/24, IMF Survey, Vol. 3 (1974), p. 148) and by Costa Rica (IMF Press Release No. 74/22, IMF Survey, Vol. 3 (1974), p. 135) during 1974. No initial par value was established or change in par value made in 1975.
The opinion declares that the calculation must be based on the value of the deutsche mark at the time the fund for the limitation of liability is established or security is provided. The actual date for this purpose is not mentioned in the judgment. The central rate applied by the court was established on June 29, 1973. The decision of the District Court was delivered on July 31, 1973.
Nederlandse Jurisprudentie, 1972, No. 269, pp. 728–38. See also Gold, “The Fund Agreement in the Courts—XI” (cited fn. 4), pp. 221–32.
For an example of a domestic provision for application of the commodity price of gold, see Decree No. 73–46 of January 9, 1973 Regarding the Issuance of the 7 per cent 1973 State Loan of France. Capital and interest are payable in francs guaranteed by reference to the European Communities’ unit of account under Regulations No. 129 of October 23, 1962 and No. 653–68 of May 30, 1968, the value of which is fixed at the same amount of gold as the par value of the U.S. dollar before the two most recent devaluations. If, on certain dates, (1) the unit of account is no longer applicable to France, or (2) the unit no longer corresponds to a weight of gold, or (3) the unit has been suspended for a year, or (4) the official value of the franc no longer corresponds to a weight of gold, or (5) the rate of exchange for the franc in financial transactions in the official market has not been maintained for one year within limits fixed or accepted by the Fund, the equivalent in francs of the weight of gold in the definition of the unit would be determined by the price in the Paris market of the 1-kilogram bar of gold.
Smith, “Legal Principles in Monetary and Credit Policy” (cited fn. 27), p. 216.
Article IV, Section 4 (amended); Schedule C (amended); Report on Second Amendment, Part II, Chap. C, sees. 6–7 and 13.
Article IV, Section 2(b) (amended).
See Gold, “The Fund Agreement in the Courts—XI” (cited fn. 4), p. 214. The will-o’-the-wisp of the official gold value of a currency is illustrated by the following description of the unit of account constructed for a particular bond issue: “A currency that has no gold value any longer (that is ‘floating’) ceases to be a reference currency until it has a gold value again. Such de iure floating must be distinguished from de facto ‘floating’ in which most of the currencies concerned are now engaged; these currencies officially have gold values and, in addition, (for exchange transactions) central rates, the fluctuation margins of which are no longer observed. The currencies concerned continue to be reference currencies since they have gold values” (C. W. M. van Ballegooijen, “The Units of Account in Eurobonds,” Netherlands International Law Review, Vol. 22 (1975), p. 54). The criterion adopted for the purpose of this unit of account appears to be the existence of a gold value for a currency under domestic law, whether or not that gold value has any practical application. For an example of the difficulties caused by the expression “official rate of exchange” when a currency is floating, see John A. Ciucci and Allen B. Hoppe, “Legal Aspects of Contracting When the Currency Rate Is Fluctuating: How the Problem Was Handled in Japan, What Future Problems Can Be Expected, and Suggestions as to How They May Be Alleviated,” Air Force Law Review, Summer 1974, pp. 53–60.
Article IV, Section 4(a): “Each member undertakes to collaborate with the Fund to promote exchange stability, to maintain orderly exchange arrangements with other members, and to avoid competitive exchange alterations.”
Selected Decisions, pp. 21–30; Annual Report, 1974, pp. 112–16. See also Documents of Committee of Twenty, pp. 34–36.
See Appendix A of this pamphlet.
See Appendix B of this pamphlet.
When the treaty was signed at Brussels on October 10, 1957, the legal margins under the Articles were 1 per cent for spot exchange transactions, and the Fund had not yet adopted its decision to double these margins for certain exchange transactions.
See Joseph Gold, Special Drawing Rights: Character and Use, IMF Pamphlet Series, No. 13, 2d ed. (Washington, 1970), pp. 50–54; Establishment of a Facility Based on Special Drawing Rights in the International Monetary Fund and Modifications in the Rules and Practices of the Fund: A Report by the Executive Directors to the Board of Governors Proposing Amendment of the Articles of Agreement (Washington, 1968), sees. 19 and 24, pp. 16 and 18–19.
T. M. C. Asser, “Golden Limitations of Liability in International Transport Conventions and the Currency Crisis,” Journal of Maritime Law and Commerce, Vol. 5 (July 1974), pp. 645–69.
See Paul P. Heller, “The Warsaw Convention and the ‘Two-Tier’ Gold Market,” Journal of World Trade Law, Vol. 7 (1973), pp. 126–29. Mr. Heller has elaborated his views in “The Value of the Gold Franc—A Different Point of View,” Journal of Maritime Law and Commerce, Vol. 6 (October 1974), pp. 73–103. See also Allan I. Mendelsohn, “The Value of the Poincaré Gold Franc in Limitation of Liability Conventions,” Journal of Maritime Law and Commerce, Vol. 5 (October 1973), pp. 125–28.
According to the Note attached to the Report by the Committee on International Monetary Law of the International Law Association (New Delhi Conference, 1974, p; 17), a similar result was reached in an Italian arbitral award of December 9, 1972 (Arbitrator Berlingieri, Perlite v. Koorts en Zoon, Riv. dir. int. privato e processuale, 1973, No. 4). See also Joseph Gold, The Fund Agreement in the Courts (Washington, 1962), pp. 4–8, for a discussion of two cases in the 1940s in which Egyptian courts refused to apply gold-value clauses on the basis of the commodity price in the Cairo market. The Egyptian pound was not defined in terms of gold, but the courts held that the U.S. dollar remained pegged to gold and the rate of exchange between the dollar and the Egyptian pound could be ascertained for the relevant dates.
Judgment No. 256/1974 (Court of Appeals, Athens, Greece, January 10, 1974). The court was called upon to apply the provisions of the Warsaw Convention and Greek law under which the carrier’s liability for the loss of luggage was limited to 250 Poincaré francs a kilogram. The court took cognizance of the fact that there was an “established and irrevocable” international gold value of the drachma and a domestic price for gold on the Athens Stock Exchange, and applied the latter because the provisions directed that the franc was to be converted into national currency at the gold value on the day of decision. This direction was understood to preclude the established value and to refer to the fluctuating value of gold.
Re Motor Ship “Saga” (Lower Court, Goteborg, Sweden, October 2, 1973). The General Average Assessor was called on to allot to vessel, freight, and cargo the costs connected with a collision in December 1972. The liability of the vessel was limited to a certain number of Poincaré francs, and the equivalent of this amount in Swedish kronor had to be determined. The Assessor referred to a statement by the director of the Riksbank that the whole system of gold-value clauses in conventions could be regarded as having collapsed on August 15, 1971; that the gold prices implicit in the values of currencies announced to the Fund were fictitious; that market prices for gold might be applied; and that the issue should be resolved by the courts. The Assessor decided in favor of the market price of gold at the time of the accident ($64.50 a troy ounce). See Heller, “The Value of the Gold Franc—A Different Point of View” (cited fn. 53), pp. 99–100. This decision and the decision of the Athens Court of Appeals (cited fn. 55) are discussed by Judith Rankin Larsen in “Legal Problems in Compensation Under the Gold Clauses of Private International Law Agreements,” Georgetown Law Journal, Vol. 63 (1975), pp. 824–26.
Larsen, “Legal Problems in Compensation Under the Gold Clauses of Private International Law Agreements” (cited fn. 56), pp. 818–20.
See Kredietbank, “Possible Uses for Special Drawing Rights,” Weekly Bulletin, August 1, 1975, p. 3.
Article IV, Section 2(a) (amended); Report on Second Amendment, Part II, Chap. C, sec. 6. The following paragraph appears under the heading Domestic Legal Steps in Part III of the Report on Second Amendment: “In view of the important and extensive changes in the Articles that will be introduced by the Amendment, members may find it necessary to review both the financial and nonfinancial aspects of their domestic legislation relating to the Articles of Agreement. The provisions relating to quotas and subscriptions, exchange arrangements, and the special drawing right may be of particular importance in connection with domestic legislation. In connection with exchange arrangements, members may wish to examine any legislation, whether relating directly to the Fund or not, that refers to par values established under the Articles.”
Schedule C, paragraph 1 (amended); Article IV, Section 2(b) (amended); Report on Second Amendment, Part II, Chap. C, sec. 13.
See the Interim Committee’s communiqué of August 31, 1975, par. 6, in IMF Survey, Vol. 4 (1975), p. 265.
 3 All E.R. 498.
“… [I]f such an award is to be held to be bad solely because of the currency in which it is expressed, grave inconvenience will be caused to those who bring their disputes to this country for decision. They want an award which will enable them to recover the same amount as that which they ought in the first instance to have received. They do not want that recovery to be exposed, if it can be avoided, to exchange fluctuations between the currency in which they ought to have received the amount initially and the pound sterling, especially since the latter was allowed to float” (ibid., at p. 504).
 1 All E.R. 152. See Note by K. Lipstein, Cambridge Law Journal, Vol. 34 (1975), pp. 215–19.
 1 All E.R. 155. Cf. Lord Justice Lawton, quoting Lord Denning in an earlier case, who described English lawyers as assuming that sterling was a currency “of whose true-fixed and resting quality there is no fellow in the firmament” (ibid., at p. 160).
For another reason that had become obsolete, see ibid., at p. 156.
Ibid., p. 158.
 1 All E.R. 1076.
The Schorsch Meier case has also been followed in The Halcyon the Great ( 1 All E.R. 882), in which it was held that the plaintiffs were entitled to have the Admiralty Marshal execute an order of the court by selling a mortgaged vessel for U.S. dollars, the currency of the mortgages, and paying the proceeds into court where they would be placed in a U.S. dollar deposit account without prior conversion into sterling, whereas the ordinary procedure in the past had been a sale for sterling and deposit in a sterling account. The court noted that probably the Admiralty Marshal had never sold property in such a proceeding in the past in any currency but sterling.
 3 All E.R. 801; The Times (London), November 6, 1975, p. 16. See also “Currencies and the Law: UK Debtors Now Liable for Increase in Foreign Suppliers’ Prices Due to Devaluation,” International Currency Review, Vol. 7 (November-December 1975), pp. 30–32; Roger Bowles and Jenny Phillips, “Judgments in Foreign Currency: An Economist’s View,” Modern Law Review, Vol. 39 (1976), pp. 196–201. For the practice of English courts in connection with claims and the enforcement of judgments expressed in a foreign currency, see Practice Direction  1 All E.R. 669–71. It has also been decided that interest on the money due to the plaintiff in the Miliangos case was payable at a rate at which a person could have borrowed Swiss francs in Switzerland at simple interest (The Times (London), May 14, 1976, p. 9).
In re United Railways of the Havana and Regla Warehouses, Ltd.  2 All E.R. 332;  A.C. 1007.
 3 All E.R. 809 (per Lord Wilberforce), and see also pp. 838 and 841; The Times (London), November 6, 1975, p. 16.
See F. A. Mann, The Legal Aspect of Money: With Special Reference to Comparative Private and Public International Law, 3d ed. (Oxford, 1971), pp. 289–92, 363, and 373.
 3 All E.R. 814–15. According to Lord Simon of Glaisdale, who dissented, “The instant appeal raises questions the answer to which imperatively demands the contribution of expertise from far outside the law—on monetary theory, public finance, international finance, commerce, industry, economics—for which judges have no training and no special qualification merely by their aptitude for judicial office. All such experience as I have had of decision making within and without the law convinces me that the resolution of this issue demands a far greater range of advice and a far more generally based knowledge than is available to a court of law.… Law is too serious a matter to be left exclusively to judges” (p. 824).
Art. 9. See also Art. 6 of International Convention for the Unification of Certain Rules Relating to the Carriage of Passengers by Sea, April 29, 1961; Art. 6 of International Convention for the Unification of Certain Rules Relating to the Carriage of Passenger Luggage by Sea, May 27, 1967.
The Germinal franc was established after the French Revolution by the law of March 28, 1803 (7 Germinal of year XI of the revolutionary calendar) with a gold content of 10/31 gram, nine-tenths fine.
The composition of the Eurco is as follows:
See also “Currency Cocktails,” The Economist (London), February 14, 1976, Survey, p. 13.
In order to avoid any exchange risk in connection with the amount of funds that it would be able to lend, the eib stated in the Offering Circular that it would convert borrowed funds immediately into the component currencies of the Eurco in approximately the same proportions as they bore to the Eurco as a whole.
It should be noted that the currencies of Ireland and Luxembourg are not among the currencies that compose the SDR.
Cf. Roland Vaubel, “Plans for a European Parallel Currency and SDR Reform: The Choice of Value-Maintenance Provisions and ‘Gresham’s Law,’ “Weltwirtschaftliches Archiv (Review of World Economics), Vol. 110 (1974), pp. 194–226.
See Commission of the European Communities, “The Units of Account As a Factor of Integration,” Information, 87/75, p. 8.
Official Journal of the European Communities, Vol. 18, No. L 104 (April 24, 1975), p. 35.
The composition of the EUA is to be as follows:
0.888 671 gram of fine gold in Article XXI, Section 2 of the Fund’s Articles of Agreement and 0.88867088 gram in Article 4 of the Protocol to the Treaty of Rome on the Statute of the European Investment Bank (eib).
“The composition of this basket is such that at 28 June 1974 the sum of the component currencies would have been equal in value to the International Monetary Fund’s Special Drawing Right when calculated on the same basis as the latter, and hence the same as the Bank’s [eib’s] statutory unit of account, by virtue of the common gold content of the unit of account and the SDR, i.e. the equivalent at that date of US$1.20635” (European Investment Bank, “Unit of Account: The EIB Uses European Unit of Account,” Information, July 1975, P. 8).
acp refers to 46 countries in Africa, the Caribbean, and the Pacific. On the Lomé Convention, see Commission of European Communities, The Courier, No. 31 (March 1975).
See “European Unit of Account: Ministers Adopt ‘Basket’ System for European Development Fund and European Investment Bank,” Trade and Industry, May 9, 1975, p. 373. The calculation is made by taking the rates for the Belgian franc for each of the currencies in its own market.
See European Investment Bank, “Unit of Account” (cited fn. 86), p. 8.
Pars. 3 and 4 of Art. 7:
“3. The parity of the currency of a Member State in relation to the unit of account defined in Article 4 shall be the relation between the weight of fine gold contained in the unit of account and the weight of fine gold corresponding to the par value of that currency communicated to the International Monetary Fund. Failing this, the parity shall be based on the exchange rate for a currency expressed in or convertible into gold which is applied by the Member State for current payments.
4. In the event of a uniform proportionate change in the par values of the currencies of all members of the International Monetary Fund or of all members of the Bank, the Board of Governors may decide that paragraphs 1 and 2 shall not apply.”
Commission of the European Communities, Draft Amendments Forwarded by the Commission Following the Consultation on the Draft Revision of the Treaty Establishing the European Economic Community, the Object of Which Is to Amend the Statute of the European Investment Bank (submitted to the Council by the Commission), COM (75) 171 final, April 22, 1975, Annexes I and II. See also Council of the European Communities, Press Release, 350th Meeting of the Council—Economic and Financial Questions, July 10, 1975 (880 e/75 (Presse 75)), p. 4. The unsatisfactory consequences of applying a gold franc as the basis for paying dividends have led to a proposal to amend Articles 51 and 52 of the Statutes of the Bank for International Settlements. The amendment would give the Bank a discretion to pay dividends without defining how the calculation should be made. (See Bank for International Settlements, Forty-Fifth Annual Report (1975), pp. 160-61.)
These, of course, are not the only treaties containing gold clauses. According to Tullio Treves, in recent practice there have been three categories of treaties containing gold-value clauses: (1) treaties providing for loans and investments entered into by socialist countries, particularly the U.S.S.R., with developing countries; (2) treaties connected with the unification of private international law; and (3) treaties that establish the constitutions of international organizations, as well as other instruments that regulate their activities (Tullio Treves, “Les unités de compte dans les conventions et organisations internationales,” in Annuaire Français de Droit International, Vol. 20 (Paris, 1974), pp. 755-56).
The International Institute for the Unification of Private Law (Unidroit) was established on April 20, 1926 in Rome by an agreement between the Italian Government and the Council of the League of Nations. It was reconstituted by a multilateral agreement on April 21, 1940 in Rome. Its primary purpose is to study methods for harmonizing and coordinating private law as between states or groups of states, prepare for progressive adoption of uniform private law legislation by various countries, and present these drafts of uniform laws to diplomatic conferences or other bodies. At present more than 45 countries are members of Unidroit.
Larsen, “Legal Problems in Compensation Under the Gold Clauses of Private International Law Agreements” (cited fn. 56), pp. 826-27.
See par. 5 of Art. 22 of the Warsaw Convention as proposed by Norway. This proposed provision became, with minor revisions in language, par. 4 of Art. 22, which was finally adopted by the International Conference on Air Law in Montreal, Canada, on September 25, 1975 (Additional Protocol No. 1 to Amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air, signed at Warsaw on October 12, 1929, Art. II).
See, for example, Art. II of Additional Protocol No. 1 to Amend the Warsaw Convention. The protocol remained open for signature until January 1, 1976 at the headquarters of the icao, and thereafter, until it comes into force, at the Ministry for Foreign Affairs of the Polish People’s Republic. Art. VII defines the circumstances in which the protocol takes effect.
See UN World Food Council, IFAD/CRP.21, February 16, 1976, Annex I, p. 8.
The New York Times, May 25, 1975, p. 18; Middle East Economic Survey, May 30, 1975, p. 7.
Petroleum Intelligence Weekly, June 16, 1975, p. 4.
See Richard Y. Chuang, The International Air Transport Association: A Case Study of a Quasi-Governmental Organization (Leyden, 1972); Andreas F. Lowenfeld, “A New Takeoff for International Air Transport,” Foreign Affairs: An American Quarterly Review, Vol. 54 (October 1975), pp. 36-50.
“… [l]f the passenger is traveling over a multistop circle trip routing the fare construction is extremely difficult. The selling of transportation originating in another country has become the object of many fare disputes because the exchange rates fluctuate daily. We constantly have disagreements with other carriers when sending prepaid ticket advices as to the correct amount of dollars needed to cover the ticket price expressed in another currency. Also, charges collect and C.O.D. airfreight shipments are presenting many problems when trying to apply the proper exchange rate at country of destination” (U.S. Civil Aeronautics Board, Agreement C.A.B. 25159 (R-l through R-9), Docket 27592, Comments of Braniff Airways, Inc., September 19, 1975, pp. 1-2). See also The Journal of Commerce (New York), November 14, 1975, p. 26, and Robert Burkhardt, “Int’l Airlines Mull Use of SDRs to Set Fares,” ibid., May 18, 1976, pp. 1 and 9.
Resolution 013, adopted effective September 1, 1975.
Cf. Sec. 1 of Art. 343 of the Czechoslovak code of international trade, under which in some circumstances the sales price expressed in a currency is adjusted if there is a change in its value (see Journal du Droit International, Vol. 102 (1975), pp. 397-400).
U.S. Civil Aeronautics Board, Agreement C.A.B. 25159 (R-l through R-9), Docket 27592, Comments of Delta Air Lines, Inc., June 10, 1975.
U.S. Civil Aeronautics Board, Agreement C.A.B. 25159 (R-l through R-9), Docket 27592, Order 75-8-74, August 14, 1975, pp. 4-5.
See U.S. Civil Aeronautics Board, Agreement C.A.B. 25159 (R-l through R-9), Docket 27592, Comments of Braniff Airways, Inc., September 19, 1975, pp. 3 and 5.
Sec. 1 of Art. III of the Agreement Establishing a Financial Support Fund of the Organization for Economic Cooperation and Development (Paris, April 9, 1975). (Hereinafter referred to as Support Fund Agreement.)
Sees. 1 and 3 of Art. XI of the Support Fund Agreement.
Sec. 1 of Art. XIV of the Support Fund Agreement.
Sec. 2(b) of Art. XIV of the Support Fund Agreement.
See Joseph Gold, Voting and Decisions in the International Monetary Fund: An Essay on the Law and Practice of the Fund (Washington, 1972), pp. 54 and 117.
Article XXI, Section 2.
Article XXV, Section 8. See also Gold, Special Drawing Rights: Character and Use (cited fn. 51), pp. 50-54.
See Appendix C of this pamphlet.
Rule O-3, By-Laws, Rules and Regulations, Thirty-Third Issue, July 15, 1975, pp. 56-58; reproduced in Appendix D of this pamphlet.
Article XV, Section 2 (amended); Report on Second Amendment, Part II, Chap. Q, sec. 1.
“Even if there is a return to a modified version of the par value system, it is still probable that a basket system will be maintained at least in an initial stage, because past experience with fixed par values will indeed prompt the necessary circumspection before more fundamental changes are made. Hence, the possible modifications will presumably relate only to the composition of the standard basket itself. Certain currencies which are not at present in the basket may be included later, while other currencies may be left out or else the share of the currencies may be changed. It is likely, however, that these modifications will remain quite limited and be based on one or another objective criterion,” (Kredietbank, “Possible Uses for Special Drawing Rights” (cited fn. 58), p. 2. See also pp. 4-5.)
Article VII, Section 2 authorizes the Fund to borrow the currency of a member not only from the member itself but also, with its consent, from other sources within or without the territories of the member.
See Selected Decisions, par. 7, p. 110; Annual Report, 1974, p. 126.
See Gold, Maintenance of the Gold Value of the Fund’s Assets (cited fn. 6), pp. 11-31.
The circumstances can be considered remote: a return to a system of par values, return to the original form of Rule O-3, a uniform change of par values, and the waiver by the Fund of the maintenance of the value of its assets.
Formerly the United Nations Economic Commission for Asia and the Far East (ecafe). The members of the Clearing Union on December 9, 1974 were India, Iran, Sri Lanka, Nepal, Pakistan, and Bangladesh.
Art. IV of the Agreement Establishing the Asian Clearing Union.
Sec. 5 of Art. V of the Agreement Establishing the Asian Clearing Union.
Stephen A. Silard, “Maintenance-of-Value Arrangements in International Transactions,” Law and Policy in International Business, Vol. 5 (1973), pp. 398–439. See also Robert Prinsky, “EMU: Precursor of a Common Currency?” European Community, January 1971, pp. 6-7; A. Leeman, “EUAs and EMUs,” Euromoney, December 1971, pp. 38-42; Donald W. Vollmer, “How the European Unit of Account Works,” Euromoney, May 1974, pp. 47-55; Hugo J. Hahn, “Geldwertsicherung im Recht der Internationalen Wirtschaft,” Jahresbericht der Bayerischen Julius-Maximilians-Universität Würzburg über das akademische Jahr 1974/75 (1976), pp. 29-51; Armand Middernacht, “Risques de change et emprunts obligataires,” Droit et Pratique du Commerce International, Vol. 1 (1975), pp. 563-79; Joseph Aschheim and Y. S. Park, Artificial Currency Units: The Formation of Functional Currency Areas, Essays in International Finance, No. 114 (Princeton University Press, April 1976).
See Stephen A. Silard, “The Effects of Current International Monetary Uncertainties on Exporters,” Revue de la Banque, Vol. 38 (1974), pp. 77-84, at p. 81.
Ibid., p. 84. Cf. the prestige conferred on the European Unit of Account by relating it to the unit of account of the European Payments Union. (See Ballegooijen, “The Units of Account in Eurobonds” (cited fn. 45), p. 53.)
Alusuisse, together with its subsidiary and affiliated companies, is a major integrated multinational producer of aluminum and aluminum products that conducts its business in Switzerland and 27 other countries. The group is the sixth largest producer of primary aluminum and the second largest producer of aluminum foil in the Western world. It also has interests in mining, chemicals, engineering, and energy.
The Swedish Investment Bank’s primary purpose is to assist in the financing of industrial and commercial products in Sweden that encourage economic rationalization, structural adaptation, and development. It also participates in the financing of Swedish exports. All of its share capital was subscribed to and is owned by the Kingdom of Sweden, which has guaranteed the obligations of the bank up to a prescribed amount.
Electricité de France was created by the French Nationalization Law of April 8, 1946 for the acquisition by the French Government of certain privately owned electric power companies. It is owned and controlled by the French Government but has financial autonomy. It functions like a private party in dealings with third parties, although the Government’s policy is to balance the company’s revenues and expenditures. Subject to limited exceptions, it has a monopoly in France of the production, transmission, distribution, importing, and exporting of electricity.
For SDR 50 million, 40 million, and 50 million, respectively. See A. Leeman, “Role Special Drawing Rights Can Play in World Capital Markets Is Assessed,” American Banker, July 31, 1975, pp. 144-45 and 148.
Enthusiasm for the denomination is said to have diminished after the U.S. dollar appreciated. See Ann Crittenden, “Chase Plans Loans and Deposits in Dollars Indexed to S.D.R.’s,” The New York Times, August 22, 1975, p. 40; “How US Economic Developments Affect the Euromarkets,” International Currency Review, Vol. 7 (September-October 1975), p. 9; C. Frederic Wiegold, “Chase Will Offer SDR-Denominated Loans, Time Deposits, Future Contracts,” American Banker, August 22, 1975, p. 1.
Peter Landau, “Will SDRs Become the New Supercurrency?” Institutional Investor, August 1975, p. 32.
A. Middernacht, “The SDR and the International Capital Markets,” Euromoney, July 1975, p. 9. See also Robert L. Genillard, “Currency Indexation Arrives in the Capital Markets,” Euromoney, September 1975, pp. 76 and 78.
Genillard, “Currency Indexation Arrives in the Capital Markets” (cited fn. 134), p. 78.
Ibid. See also Kredietbank, “Possible Uses for Special Drawing Rights” (cited fn. 58), pp. 4-5; Middernacht, “The SDR and the International Capital Markets” (cited fn. 134), pp. 7 and 9.
The Eurobond issues denominated in SDRs that have been made so far contain provisions whereby the value of the SDR expressed in U.S. dollars can be calculated for any day for which the Fund does not make the determination.
See Euromoney, September 1975, p. 127. This advertisement describes the bank as conducting operations in SDRs. In a brochure describing its services, the bank states that “the SDR is at the same time a unit of account, a currency (of currencies) and a credit instrument.” See also a news release of August 21, 1975 by Chase Manhattan Bank: “‘Since under the rules today only the central banks may hold and utilize SDRs, we cannot make a forward market in the classic sense, for neither we nor the other party can physically exchange SDRs. By offering a future SDR contract price we achieve the same results for our customers,’ said the Chase senior vice president.” And from another source, “While Chase Manhattan were still deliberating over the new services they would introduce during 1975, Bankhaus Deak & Co. Ltd. [of Vienna] began issuing international certificates of deposit denominated in SDRs in February. These ICDs, minimum 1,000 SDRs, are being issued for periods of three, six and twelve months, with the purchase price fixed in relation to the U.S. dollar value of the SDR. However, as experienced by Chase Manhattan, interest has disappeared in these ICDs and in fact, only one has been issued since February” (Deak-Perera Digest: A Survey of Financial Newsletters and Magazines, Vol. 2 (January 1, 1976), p. 9).
“To protect itself from exchange risks, the bank will reinvest the funds on the Eurocurrency market and elsewhere, roughly in proportion to the weighting of the 16 major currencies that make up the SDR …” (“Private SDR Deposits Make the Unit More and More Like Money,” Business International Money Report, July 10, 1975, p. 163). A similar practice will be followed by Chase Manhattan Bank, “But, because the markets are not big enough, it will not be able to buy all of the 15 currencies, besides the dollar, that make up the basket” (Wiegold, “Chase Will Offer SDR-Denominated Loans, Time Deposits, Future Contracts” (cited fn. 132), p. 12).
“New Futures Market in SDRs Improves Business Protection,” Business Europe, August 29, 1975, p. 275. According to the New York Times of August 22, 1975 (p. 40), this geographical limitation was being observed pending “a study of the move by the Federal Reserve Bank of New York,” but Chase hoped to make all the services available in New York soon.
“Some British exporters of heavy equipment goods, one hears in business circles, had recently to respond to international tenders denominated in SDR’s as well as sterling, which tends to confirm the more and more widely spread utilization of SDR’s in international contracts. The latest such case, as observed in banking circles, is the use of SDR’s for a $50 million tender launched by the Office national de l’électricité de la Grande-Dixence for turbine generators. It is felt that SDR’s could in future be used for the fixing of contract prices and financing of such contracts in the form of SDR-indexed loans” (unofficial translation provided by the Banque Keyser Ullmann of an article, “SDR’s Are Beginning to Be Used in International Tenders,” published in Agence Economique et Financière (Zurich/Paris) on September 3, 1975). For a detailed examination that arrives at a restrained conclusion on the question of “The Commercial Use of SDRs,” see Morgan Guaranty Trust Company of New York, World Financial Markets^ August 19,1975, pp. 4-11. See also Ekonomicheskaya Gazeta (Moscow), No. 44 (October 1975), p. 21 (according to an unofficial translation made for use within the Fund). Cf. Terry McFadgen, “Eurocurrency Loans,” The New Zealand Law Journal, July 1975, p. 274, and Ann Crittenden, “Floating Rates Burden Business,” The New York Times, December 13, 1975, p. C37. See also F. Bilteryst, “La gestion du risque de change dans une entreprise multinationale,” Droit et Pratique du Commerce International, Vol. 1 (1975), pp. 549-62.
See Wiegold, “Chase Will Offer SDR-Denominated Loans, Time Deposits, Future Contracts” (cited fn. 132), p. 1. Agence Economique et Financière (Paris), December 5, 1975, p. 8, “said in a New York report that banking sources said that despite some interest shown in the SDR this year, it has not so far played a major role in international transactions. The relative firmness of the dollar in recent months has reduced the usefulness of SDR transactions while the complexity of the SDR has dissuaded a number of potential users, the paper said. It quoted commercial banking officials as saying that an international payments medium must be easily buyable and sellable, with a system of deposits and a credit market and with the possibility of transactions in it, qualities which the SDR lacks. A Chase Manhattan spokesman said that the bank had only received one client deposit denominated in SDRs since launching its scheme earlier this year. He added that it appears that the SDR account is an idea whose time is not yet ripe” (unofficial translation made for use within the Fund).
“Other holders” under the present Articles are nonmembers, members of the Fund that are nonparticipants in the Special Drawing Account, and institutions that perform functions of a central bank for more than one member, if prescribed by the Fund by an 85 per cent majority of the total voting power (Article XXIII, Section 3). The General Account of the Fund also is a holder of SDRs (Article XXIII, Section 2). Additional holders may be prescribed under the proposed second amendment, but only if they are official entities (Article XVII, Section 3(i) (amended). For a suggested indirect use by private parties that might be possible under the present Articles, see Documents of Committee of Twenty, p. 123.
Article XXV, Sections 3 and 5.
Article XXV, Section 1(b) and (c).
Article XXV, Section 2(b).
See Gold, Special Drawing Rights: Character and Use (cited fn. 51), pp. 29-74.
See Outline of Reform in Documents of Committee of Twenty, pp. 15-17, 22, and 41-45; Report on Second Amendment, Part II, Chap. Q, sec. 2.
U.S. dollar, pound sterling, French franc, Belgian franc, deutsche mark, Italian lira, Mexican peso, Netherlands guilder. The Mexican peso is the only currency in this list that is not in the basket. (Article XXV, Section 4; Article XXXII(b); Rules and Regulations, Rules O-l and 0-2; and Executive Board decisions on currencies convertible in fact in Selected Decisions, Sixth Issue (1972), pp. 133-39.)
Article XXV, Section 2(b).
Article XXV, Section 8.
U.S. Treasury Department, News (WS-175), December 9, 1974: “Contracts containing multiple currency clauses, as in the past, are unenforceable under the Resolution. The reason for this is that in the late 1930’s the Supreme Court construed the Resolution to prohibit enforcement of multi-currency contracts.” See also a statement by the Secretary of the Treasury on December 3, 1974: “You also asked whether new legislation should be considered to allow contracts containing a multiple currency clause. This is a subject that is not directly related to private gold ownership. The Supreme Court, in the late 1930’s construed the Gold Clause Joint Resolution, which as I have noted continues in effect, to prohibit enforcement of multiple currency contracts in the United States. Today, such financing devices have become common in international financial markets. For example, bonds are issued and denominated in Eurcos which provide for payment in a number of European currencies in an amount measured by an index composed of these currencies. I see no reason why American businessmen should not be able to deal in this kind of instrument. Consideration of a change in the law at the next session of Congress would be desirable” (U.S. Congress, House, Committee on Banking and Currency, Subcommittee on International Finance, To Delay Until July 1,1975, the Date for Removing Restrictions on Private Ownership of Gold, Hearings, 93rd Cong., 2d Sess., December 3 and 5, 1974 (Washington, 1974), p. 8).
Public Resolution No. 10 (H.J. Res. 192), 48 Stat. 112; 31 U.S.C. §463. For an argument that, as a consequence of the restoration of the right of private ownership of gold, the resolution has at best a shaky foundation, see Gerald T. Dunne, “Gold Clauses: Dead or Well?” Banking Law Journal, Vol. 92 (1975), pp. 927-29.
307 U.S. 247 (1939).
307 U.S. 265 (1939). In both cases the court was divided five to four.
See Mann, The Legal Aspect of Money (cited fn. 74), p. 187, fn. 2; Arthur Nussbaum, Money in the Law: National and International (Brooklyn, 1950), pp. 435-36; Ernst Rabel, The Conflict of Laws: A Comparative Study (Ann Arbor, 1964), Vol. III, pp. 44-46.
No reference to gold is made in the Eurobonds denominated in SDRs. It has been explained that this omission was deliberate in order to avoid legal obstacles in some countries.
A clause providing for payment in other currencies would seem to dispose of any argument that a debt expressed in SDRs is a claim to U.S. dollars because the par value of the U.S. dollar is defined by U.S. law as “0.828948 Special Drawing Right or, the equivalent in terms of gold, of forty-two and two-ninths dollars per fine troy ounce of gold” (87 Stat. 352).
Cf. the discussion of Norwegian law by Smith, “Legal Principles in Monetary and Credit Policy” (cited fn. 27), p. 214: “There are several variations of multiple-currency bonds on the market, and the conspicuousness of the multiple-currency character of one bond may be greater than that of another. In my view, the [Norwegian] act of 1933 ought to be given a restricted scope and should be applied only to those multiple-currency bonds in which a definite amount in kroner has been stipulated. But this conclusion cannot be drawn with certainty on the basis of existing legal sources, which are very scarce.”
Aztec Properties, Inc. v. Union Planters National Bank of Memphis (Tenn. Sup. Ct.), 530 S.W. 2d 756 (1975), 44 L.W. 2209 (November 11, 1975), in which the resolution was applied to a domestic loan contract that defined the debt in constant U.S. dollars adjusted for inflation; N. V. Motorscheepv. Maats. Josephine and Dammers & Van Der Heide’s Shipping & Trading Co., Ltd. v. Azta Shipping Company and 2,350 Bags of Costa Rican Coffee, 1975 A.M.C. 1339 (U.S. District Ct., Eastern District of La., May 22, 1975), in which the resolution was applied to a clause in a charter party granting a right of cancellation if the official rate of exchange between the U.S. dollar and the Netherlands guilder at the date of signing the contract should change by more than 5 per cent. See also Gerald T. Dunne, “Gold Clause Prohibitions—Alive and Well,” Banking Law Journal, Vol. 93 (1976), pp. 131-32.
“‘We’re looking for them to respond shortly,’ … adding that the bank knows of no legal reason why it could not proceed. These transactions ‘would not create risk for the bank, affect the value of the dollar or result in an outflow of dollars’…” (Wiegold, “Chase Will Offer SDR-Denominated Loans, Time Deposits, Future Contracts” (cited fn. 132), p. 12.
U.S. Treasury Department, News (cited fn. 151), p. 2. See also Report by the Committee on International Monetary Law of the International Law Association (New Delhi Conference, 1974), p. 4: “… the precise scope of the famous 1933 Joint Resolution of the U.S. Congress, invalidating gold clauses, remains to be determined with sufficient clarity and, on account of that uncertainty, draftsmen of monetary guarantee clauses abstain from recourse to the dollar as currency of reference in international contracts which might become subject to American law or to the jurisdiction of American courts.” With respect to unit-of-account clauses that refrain from reference to gold, “most national systems of law (with the possible exception of the U.S.) recognise their validity in international contracts….” The conference adopted the following resolution: “Considering that more and more currencies are floating in relation to each other and that the margins of fluctuation for the other currencies are tending to become enlarged;
Considering that the proposals for the reform of the international monetary system envisage stable yet adjustable parities;
Considering that international transactions in the fields of trade, services and capital movements presuppose a minimum of legal certainty concerning their monetary aspect, at least where those operations are of a long-term nature;
Declares that where parties to an international contract have agreed upon provisions intended to secure the value of payments to be made in accordance with its terms, such provisions shall be and remain valid and effective irrespective of their abrogation by a municipal system of law which may be applicable to such provisions; and
Invites the Committee to carry on its work with a view to a further implementation of the above principle” (Bulletin of the 56th Conference of the International Law Association, New Delhi, December 29,1974-January 4,1975 (London), p. 27).
When the second amendment of the Articles becomes effective, the General Account of the Fund will become the General Department. It will consist of a General Resources Account and, possibly, a Special Disbursement Account and an Investment Account. Currencies held in the last two accounts will not be maintained in value (Report on Second Amendment, Part II, Chap. H, particularly sec. 4).