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International Monetary Fund

Abstract

INTERNATIONAL MONETARY FUND PAMPHLET SERIES

International Monetary Fund

Abstract

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:

International Monetary Fund

Abstract

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.

International Monetary Fund

Abstract

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.

International Monetary Fund

Abstract

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.

International Monetary Fund

Abstract

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.

International Monetary Fund

Abstract

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

International Monetary Fund

Abstract

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.

International Monetary Fund

Abstract

The Fund can decide whether or not to admit countries to membership. In considering applications, the Fund’s practice is to satisfy itself that the country is a state that conducts all of its international relations and that the obligations of the Articles will be performed. Membership in the Fund had grown to 103 states by the beginning of 1966. Among the non-members are the U.S.S.R. and countries of Eastern Europe, Switzerland, and certain small territories such as Liechtenstein, but this list is not complete. The Eastern European countries include two that are former members of the Fund: Czechoslovakia and Poland. Cuba and Indonesia are also ex-members.

International Monetary Fund

Abstract

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.