APPENDIX I. Fund’S Statement On Exchange Arrangements In Italy

International Monetary Fund
Published Date:
September 1948
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(Press Release of December 4, 1947)

The International Monetary Fund was informed by the Italian Government of the measures taken by that Government in its foreign exchange control practices. Although Italy is a member of the Fund, no par value for the lira has yet been agreed with the Fund. This is also true of eight other members of the Fund.

Under the system prevailing in Italy up to November 27, all Italian recipients of foreign exchange were required to sell one half of their receipts to the monetary authorities at an official fixed rate of exchange (350 lire to the dollar since August). The other half might be sold at the free exchange rate through authorized banks. Thus those selling foreign exchange received a price which was the average of the official and the free rates. On November 27 the Italian Government modified the foregoing system to provide that the one half of all foreign exchange receipts sold to the monetary authorities will be sold at a rate established every month at the average of the free market rates in the previous month, with upper and lower limits of 650 and 350 lire to the dollar respectively.

Arrangements which, in fact, result in fluctuating exchange rates are not in accord with the long-term objectives of the Fund. The Fund recognizes, however, that in some cases members may be required, for temporary periods, to institute extraordinary measures in an attempt to meet particular difficulties. The Fund will look on such measures for temporary periods with sympathy. In the case of Italy, the Fund feels sure that the Government is fully in agreement with the long-run purposes of the Fund and will, as soon as possible, move toward the establishment of fixed and stable exchange rates.

The modifications in their exchange procedure instituted by the Italian Government bring the actual rate of exchange of the lira to the dollar nearer to the equilibrium of the internal and external price levels. They thus encourage Italy’s ability to export. They narrow the gap between effective buying and effective selling rates and eliminate discrimination among different classes of commodity imports and exports.

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