I. Introduction

International Monetary Fund. External Relations Dept.
Published Date:
September 1957
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As the Fund completes its eleventh year of operation, it is able to report further progress in the relaxation of exchange restrictions, although the progress in the past year was not at the same rate as in preceding years. The process of freeing trade and payments was continued in spite of a reduction in the international reserves of certain important countries.

In the Annual Report of the Executive Directors published in 1956, it was observed that "foreign exchange restrictions impose a less serious obstacle to international commerce today than at any time since the outbreak of World War II." Restrictions—and these include restrictions on trade as well as on payments—have been relaxed still further since that observation was made. At the present time, therefore, the Fund can report that further progress has been made toward its objective of establishing a fully multilateral system of payments. Against this it is to be noted that a large majority of Fund members still retain exchange control—although with widely differing degrees of restrictiveness in its application—and that in many instances it is not possible to predict an early establishment of a truly multilateral payments regime.

At present, member countries, so far as their restrictive practices are concerned, can be classified broadly as follows: In Central and North America there are eleven countries with convertible currencies that do not avail themselves of the transitional arrangements of Article XIV of the Fund Agreement and which maintain minimal exchange restrictions, if any. In Western Europe, some countries have so liberalized trade and payments that it appears they would be able, without any very significant readjustment, to participate in a general move to establish a regime of full convertibility. Gradually approaching this position are the United Kingdom and a number of other Western European and Sterling Area countries, in which stable unitary exchange rates predominate but restrictions are applied to limit certain imports, with a lessening but still significant distinction between currencies of payment—particularly between dollars and other currencies. Nonresident holders of currencies of the countries in this group are generally able to obtain dollars at rates close to parity. Outside Europe and North and Central America, several countries, of which Lebanon, Peru, and Thailand are examples, have for some time maintained liberal nondiscriminatory import and payment policies which come very near to full convertibility. Finally, there are countries that retain relatively elaborate systems of exchange control, including complex systems of multiple rates and bilateral arrangements, and often distinguish between commodities as well as between countries and currencies of payment. For these countries, considerable further progress would have to be made before participation in a general move to a liberal and convertible regime could be contemplated.

The present Report covers the period since the end of April 1956. Part I gives a brief general survey of developments in exchange restrictions throughout the world. Part II describes the main features of each member’s restrictive system as at the end of 1956, and includes brief descriptions of the exchange systems of member countries not availing themselves of the transitional arrangements. In addition, surveys of certain nonmember countries are included. Important changes made in the early part of 1957 are also reported.

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