Abstract

Article IV, Section 8(d), was amended to intensify the formal requirements for exercise of the power to waive maintenance of the gold value of the Fund’s assets, but it is obvious that there was no widely held conviction that the power should be abolished. Retention of the power shows that there has been no general feeling that the power was otiose because there were no conceivable circumstances in which it would be sensible to exercise it. The decision to retain the power becomes all the more obvious when it is realized that during the negotiations leading to the international agreement on special drawing rights, the power did not lack critics who pointed out that it was a flaw, even though more technical than practical, in the quality of the gold tranche. Moreover, the existence of two schools of thought is apparent from the Outline which was approved by the Board of Governors in September 1967 as the basis for drafting the facility through which the Fund could generate special drawing rights. On the question of “Maintenance of gold value” of special drawing rights, the Outline included alternative solutions: