Abstract

Whatever may be the practical difficulties of deciding that there shall be a uniform proportionate change, whether with or without a waiver under Article IV, Section 8(d), it will be assumed that there is such a change and a waiver in order to consider a further question. Under Article IV, Section 7, a member can inform the Fund within 72 hours of the Fund’s decision to make a uniform proportionate change that it does not wish the par value of its currency to be changed, and in that event its par value remains unchanged. If the member’s sole interest is to protect the gold value of its gold tranche, opting out of a uniform proportionate change will have that effect. Both the par value of the member’s currency and its quota would then probably be out of alignment with the par values and quotas of the members that had permitted the uniform proportionate change to affect the par values of their currencies. Nothing would prevent the member from proposing a change in the par value of its currency under Article IV, Section 5. Under that Article, the Fund would have to be satisfied that the member was in fundamental disequilibrium and that after giving the member the benefit of any reasonable doubt, the change was neither too large nor too small to correct the disequilibrium. A member that opted out of a uniform proportionate devaluation would not be likely to have any difficulty in showing that it was now in fundamental disequilibrium even though it might not have been before the uniform proportionate change. Furthermore, there would probably be no difficulty about the amount of the devaluation if the member proposed a change of the same proportion as the uniform proportionate devaluation. If the change in par value were made in this way, this would again preserve the former gold value of the member’s gold tranche.