Communiqué of the Ministers and Governors of the “Group of Ten” Issued on September 28, 1965

1. In the course of the Annual Meeting of the International Monetary Fund in Washington, the Ministers and Central Bank Governors of the 10 countries (Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, the United Kingdom and the United States) participating in the General Arrangements to Borrow met under the Chairmanship of Mr. Emilio Colombo, Minister of the Treasury of Italy. Mr. Pierre-Paul Schweitzer, Managing Director of the International Monetary Fund, took part in the meeting, which was also attended by the Secretary General of the Organization for Economic Cooperation and Development, the General Manager of the Bank for International Settlements, and the President of the Swiss National Bank.

2. They noted that, since their meeting in Paris in December 1964, the Members of the Group had been called upon, in May 1965, to provide additional supplementary resources to the Fund in the amount of $525 million. This brings the cumulative use of the General Arrangements to Borrow to the amount of $930 million. The use made of the General Arrangements to Borrow has demonstrated once again the important contribution which those arrangements provide to the smooth functioning of the international monetary system.

3. The General Arrangements to Borrow were originally made effective from October 1962 to October 1966. It was stipulated that a decision should be taken on renewal of the Arrangements before October 24, 1965. The Managing Director of the Fund has indicated his continuing need of these supplementary resources. The Ministers and Governors agreed that the Arrangements should be renewed for a second period of four years. However, they would suggest, in the light of increasing experience with these credit facilities, that a review be undertaken in due time for the purpose of considering whether some adaptation would be desirable in October 1968, or later.

4. The Ministers and Governors reviewed developments in international payments during the past nine months and reaffirmed the increasingly vital role of close cooperation of the Group in the light of the inevitable tendency of any major financial stresses and imbalances in payments to have consequences of importance to all members of the Group. They also noted with approval the putting into effect of the program of “Multilateral Surveillance” recommended by Ministers in August 1964; this program had contributed to a better understanding of the ways in which deficits and surpluses were being financed, as well as their repercussions on other countries and on the evolution of international liquidity.

5. The Ministers and Governors noted in particular that the deficit in the U. S. balance of payments which had for years been the major source of additional reserves for the rest of the world is being corrected and that the United States has expressed its determination to maintain equilibrium in its balance of payments. They welcomed this development in the United States international payments position which in itself contributes to the smooth functioning of the international monetary system. At the same time, they concluded that it is important to undertake, as soon as possible, contingency planning so as to ensure that the future reserve needs of the world are adequately met.

6. The Ministers and Governors recalled the mandate given to their Deputies in October 1963, to “undertake a thorough examination of the outlook for the functioning of the international monetary system and of its probable future needs for liquidity.” They noted that their Deputies had submitted to them an interim report on these problems in July 1964, and had arranged for a detailed examination of various proposals for the creation of reserve assets by a special Study Group. The report of this Group, which has now been published, will facilitate, through its exposition of the elements necessary for the evaluation of various proposals for reserve creation, the acceleration of the work of contingency planning.

7. Therefore, as the first phase of contingency planning, the Ministers and Governors gave instructions to their Deputies to resume on an intensified basis the discussions which were the subject of the Annex to the Ministerial Statement of August 1964. The Deputies should determine and report to Ministers what basis of agreement can be reached on improvements needed in the international monetary system, including arrangements for the future creation of reserve assets, as and when needed, so as to permit adequate provision for the reserve needs of the world economy. The Deputies should report to the Ministers in the spring of 1966 on the progress of their deliberations and the scope of agreement that they have found. During the course of their discussions, it would be desirable for the Deputies to continue to have the active participation of representatives of the Managing Director of the International Monetary Fund, and also of the Organization for Economic Cooperation and Development, and the Bank for International Settlements. The Swiss National Bank will also be invited to continue to send its representative to the meetings of the Group.

8. The Ministers and Governors recognized that the functioning of the international monetary system would be improved if major and persistent international imbalances would be avoided. They recalled that, in their statement of August 1964, the Ministers and Governors had invited Working Party 3 of the Organization for Economic Cooperation and Development to make a thorough study of the measures and instruments best suited for achieving this purpose compatibly with the pursuit of essential internal objectives. They expressed the hope that Working Party 3 would be in a position to make their views known at about the same time as the Deputies of the Group of Ten report to the Ministers and Governors.

9. The Ministers and Governors recognize that, as soon as a basis for agreement on essential points has been reached, it will be necessary to proceed from this first phase to a broader consideration of the questions that affect the world economy as a whole. They have agreed that it would be very useful to seek ways by which the efforts of the Executive Board of the Fund and those of the Deputies of the Group of Ten can be directed toward a consensus as to desirable lines of action, and they have instructed their Deputies to work out during the coming year, in close consultation with the Managing Director of the Fund, procedures to achieve this aim, with a view to preparing for the final enactment of any new arrangements at an appropriate forum for international discussions.

Reference List of Principal Topics Discussed¹

Central bank cooperation 19, 42, 87, 91, 105, 130, 161, 185

Developing countries

• Burden of debt 13, 24-25, 35, 62-63, 70-71, 92, 109 127, 142, 159, 167, 177, 187, 195, 200

• Finance for development 8, 12, 33, 57, 62, 70, 74, 78, 110, 126, 134, 170, 173, 175, 177, 180

• Fiscal problems 67, 177, 178

• Needs and growth 5, 9, 17, 37, 58, 61, 76, 77, 126-27, 133, 164, 187

Gold

• Link with new type of asset 44, 45, 88, 98, 125, 141, 183, 185

• Price of 38, 42, 65, 141

• Reserves 2, 19, 20, 27, 40-42, 53, 55, 73-74, 81, 88, 99, 103-104, 131-32, 158, 165-66, 172

Group of Ten’s communiqué 80, 89, 107

International capital movements 18-19, 24, 32, 36, 37, 54, 70, 78, 105, 115, 187-88, 193

International economic situation 16, 77, 95, 99, 142-43

International liquidity

• Adequacy assessed 2, 8, 26, 29, 41-42, 58, 71, 73-74, 97, 99, 104, 117, 118, 122, 126, 139-40, 147-49,163, 167, 173, 188, 193, 195, 204

• Balance of payments adjustments 46, 88, 97, 105, 115-18, 123, 146, 162, 164

• Conditional and unconditional 39, 42, 117, 140, 185

• From U.S. deficit 2, 40, 62, 64, 91-92, 103-104, 111, 118, 173, 223

• Role of industrial countries 14, 38, 44, 50, 64, 65, 69, 79-80, 84, 90, 107, 118-19, 125, 143, 148, 166, 168, 172, 182, 188, 210, 220-21

• Role of the Fund 13-14, 27-31, 34, 44, 50, 56, 64, 70, 74, 78-79, 82, 84, 89-90, 91, 98, 99-100, 101, 105-108, 110-12, 119, 130-32, 138, 144, 150, 156, 157, 159, 162, 166, 168, 172, 173, 175, 178, 180-81, 183, 185, 188, 190, 193, 195, 201, 202, 203, 204, 205, 212, 219, 221, 223, 226

• Studies 3, 13, 28, 29, 30, 39, 45, 55, 56-57, 71, 80-81, 88, 90, 97, 99, 104, 105, 111, 124, 125, 129-30, 133, 135, 139, 150, 156, 166, 169, 170, 177, 188, 218, 222, 226

• Techniques of expansion 27, 29, 40-46, 55-56, 65, 74, 88, 90, 91-92, 99, 124-25, 128, 138-39, 140-41, 147-49, 151, 165-66, 172-73, 177, 185-86, 203, 208

• World-wide concern 14, 17, 26, 30-31, 38, 56, 65, 69, 72, 79-82, 84, 90, 99, 106-108, 111-12, 138, 143-44, 148, 149-50, 156, 169, 173, 177-78, 183, 184, 188, 190, 201, 203, 204, 213, 223, 224, 226

• and developing countries 34, 49-50, 57, 64, 74, 79-82, 83-84, 92-93, 111-12, 126, 133-34, 143-44, 148, 151-52, 156, 157-58, 160, 169-70, 173, 178, 182-83, 185-86, 188, 193, 196, 202, 203, 204, 205, 206-207, 208, 210, 212, 221, 223

International Monetary Fund

• Activities and studies suggested 4, 34, 152-54, 159, 170, 173, 176, 177, 183, 196, 222

• Annual Report 15, 23, 29, 38-39, 49, 53, 59, 66, 75, 82, 85, 90, 95, 111, 115, 119, 129, 133, 137, 139, 142, 145, 148, 150, 157, 160, 167-68, 175, 176, 177, 180, 184, 188, 189, 195, 204

• Compensatory financing 22, 29, 34, 60, 68, 74-75, 92, 135, 153, 176, 186, 189, 200, 203, 205, 207, 224, 226

• General Arrangements to Borrow 20, 27, 29, 45, 96, 100, 126, 130, 146, 225

• Quota increases 22, 28-29, 54, 59, 68, 71, 74, 75, 96 100, 112, 141, 143, 155, 158, 167, 174, 178, 186, 196, 199, 201, 219, 225

• Technical assistance 4, 22-23, 34, 84-85, 136, 152, 155, 160-61, 175, 177, 179, 182, 191, 192, 201, 208, 209, 217-18

• Transactions 19-21, 76, 87, 90-91, 101, 120, 129, 136, 146, 155, 176, 182, 197, 208

• Transactions policies 20-21, 41, 63-65, 68, 74-75, 110-11, 131, 135, 146, 153, 155, 158, 190, 203, 205, 220

Monetary stability 16, 77, 115-18, 146-47, 171,174, 206

Prices of primary products 12, 17-18, 22, 35, 36, 51, 59-61, 62, 70, 71, 77-78, 92, 126, 127-28, 134, 142, 176, 182, 183, 187, 195, 200, 210, 218, 222, 224

Regional economic arrangements 152, 191, 194

Reserve currencies 2, 14, 37, 45-46, 55, 85, 87-88, 91-92, 99, 101, 119, 123-24, 144, 146, 158, 165, 193

UNCTAD 8, 9, 22, 24, 26, 29, 34, 36, 60, 61, 127, 152, 159, 180, 203, 222