As the central institution in the international monetary and payments system, the IMF must be in a position to assist any of its member countries having balance of payments difficulties. It must also be prepared, at all times, to guard against unexpected events that might threaten the stability of the system. The IMF needs adequate financial resources to carry out these responsibilities. This is particularly important now, given the fundamental political and economic changes that are taking place in the former Soviet Union, Eastern Europe, and in many other parts of the world. This pamphlet takes a brief look at the functions of the IMF, why it needs more resources, and how these resources will be used.
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
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:
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.