Mr. Paul Louis Ceriel Hilbers, Mr. Arto Kovanen, and Mr. Charles Enoch
The European Monetary Institute has been working with national central banks of the European Union (EU) to prepare instruments for the operation of monetary policy in Stage 3 of European Economic and Monetary Union. Several publications describing the proposed arrangements have been issued. This paper briefly summarizes the arrangements and identifies some areas in which important decisions still have to be made or refinements introduced—including the choice of counterparties in fine-tuning open market operations; the design of reserve requirements; the signaling function of monetary operations; and payment system relationships with non-EMU participants in the EU.
This paper examines legal provisions and practices of the IMF that involve nonmember states. It considers certain preliminary topics including: categories of nonmembers, subordinate territories for which members are responsible, and ex-members. It then discusses three ways in which nonmembers are affected either because members are limited in their freedom of action in dealing with nonmembers or because nonmembers have consented to certain obligations or standards that parallel those of the Articles. Withholding of certain benefits from nonmembers is also outlined.
One effect of the Articles on non-members results from the exercise of the Fund’s authority to enter into agreements with them. The major example of an international agreement of this kind is the agreement of June 11, 1964 between the Fund and Switzerland.44
The discussion of Article XI, Section 1, and of premium gold transactions has dealt with two examples of the technique of acting through members in order to affect non-members and thus mitigate the possibly disturbing consequences of the fact that non-members are not bound by the obligations of the Articles. A similar result has been sought by a different technique, one by which obligations comparable to those of members are imposed on non-members under another multilateral international agreement as an alternative to the assumption of the obligations of membership in the Fund. This refers to the “special exchange agreement,” which is prescribed under the General Agreement on Tariffs and Trade (GATT). The special exchange agreement is an unusually interesting legal phenomenon and many of its features are probably unique.
A purpose of this paper is to see whether there are legal effects on non-members even though they have not accepted the Articles. However, there are some obligations that can be owed by the Fund to a non-member or by a non-member to the Fund because of the former acceptance of membership in the Fund by the non-member. These are obligations related to the settlement of accounts between a former member and the Fund.
The discussion so far has dealt with the obligations of the Articles and the extent to which they have been brought to bear on non-members. In this and some of the succeeding sections of this paper the subject will be the extent to which the benefits of the Articles have been accorded to or withheld from non-members.
The experience of the International Monetary Fund in relation to non-member states illustrates the misleading character of any principle, however formulated, which suggests that states cannot be affected, to their advantage or disadvantage, by a treaty to which they are not parties.
The Fund has taken cognizance of the fact that the signatory of a special exchange agreement would not be free to impose discriminatory exchange restrictions against other contracting parties, without having the benefit of any provision in the special exchange agreement comparable to Article XI, Section 2, of the Fund’s Articles. Therefore, a signatory would be unable to impose exchange restrictions against contracting parties that were members of the Fund, but the latter would be able to impose exchange restrictions against the signatory. Members would be able to do this under Article XI, Section 2, unless, of course, the Fund made the finding referred to in that provision. It is true that Article XV: 4 of GATT provides that contracting parties shall not, by exchange action, frustrate the intent of the provisions of GATT, but Article XV: 9(a) states that nothing in GATT precludes the use of exchange restrictions if they are in accordance with the Fund’s Articles.
At a time when the growth in premium gold transactions engaged the close attention of the Fund, an effort was made to affect the actions of non-members in connection with these transactions. Under Article IV, Section 2, members must refrain from buying gold at a premium (a price above the par value plus the prescribed margin) or selling it at a discount (a price below the par value minus the margin). The provision does not explicitly prohibit sales by members at a premium or purchases at a discount, and it does not deal with purchases or sales by private parties or non-members. However, as already noted, under Article I (iii), it is a purpose of the Fund to promote exchange stability, maintain orderly exchange arrangements among members, and avoid competitive exchange depreciation; and under Article IV, Section 4(a), members undertake to collaborate with the Fund to promote exchange stability, maintain orderly exchange arrangements with other members, and avoid competitive exchange alterations. On June 18, 1947, the Fund communicated to members a policy statement 16 in which it deprecated international sales of gold at a premium and recommended that all members take effective action to prevent these transactions with “other countries or with the nationals of other countries.” The statement went on to say that: