Chapter

Surveys of Exchange Controls and Restrictions in

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
September 1954
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Argentina

Origin and Essential Features

Exchange restrictions were introduced in Argentina on October 10, 1931. Subsequently, they were relaxed gradually, but they were reimposed in November 1946 and intensified during the following years. The last major revision was made on August 29, 1950. Since that time some modifications have been introduced, which have tended to increase the complexity of the exchange system. In early 1952, additional effective export rates were introduced by “mixing” the exchange rates for some exports. More “mixing” rates were introduced during 1953, and more control has been exercised over the “free” market. During the last few years there has been a frequent reclassification and shifting of import and export commodities to the more depreciated exchange rates.

Restrictions are exercised through global allocations of currencies for all imports, licenses for all imports, individual import quotas for some goods, licenses for nontrade payments, and a multiple exchange rate structure of nine effective buying rates and three selling rates. Some exports are controlled, with the requirements of the domestic market being taken into account.

Exchange Rate System

The basic official rates, both buying and selling, are Argentine Pesos 5.00 per US$1. Since August 29, 1950, the exchange rate system has consisted of two fixed rates, M$N 5.00 and M$N 7.50 per US$1, and a fluctuating “free” market rate. Beginning in February 1952, however, a gradual shifting of export transactions to more advantageous rates for exporters has been taking place; seven “mixing” rates have been introduced, of which six are still in force (see Table of Exchange Rates, below).

Administration of Control

The administration of exchange control is exercised by the Central Bank of Argentina in cooperation with the government trade authorities and through authorized banks and dealers. The Central Bank regulates virtually all transactions affecting the international financial position of the country. The fixed exchange rates are determined by the Central Bank, which also Controls the fluctuating “free” market rate.

Prescription of Currency

As a general principle, payments must be made or received in accordance with the terms of Argentina’s payments agreements with other countries and monetary areas, and as prescribed in the exchange control regulations.

Imports and Import Payments

All imports (including those of the Government) require exchange licenses, which serve as authority both to import and to obtain the necessary exchange for payment. These licenses are granted according to the origin and the category of the imports, usually on the basis of over-all quotas. Individual import quotas are established for certain essential goods. In addition, there are two special types of licenses:

1. Licenses carrying no right to official exchange. Licenses “without use of exchange” are issued for a specified group of commodities and under certain conditions, with the understanding that applicants have private funds abroad with which to make the payment. They can also be issued to cover imports for investment in accordance with the law and regulations governing the admittance of new foreign capital into Argentina.

2. Licenses for imports effected on a deferred payment basis. These licenses are approved with the understanding that importers have arranged for extended credit terms from their suppliers abroad and will be entitled to claim official exchange only when these obligations fall due. Time conditions for such arrangements are established generally in the circulars announcing that applications for such licenses will be considered by the Central Bank.

In general, preferred imports, such as fuel oils, coal, and coke, are effected at the M$N 5.00 rate. Essential imports (foodstuffs, steel, tobacco, industrial materials, metal products, pharmaceuticals, surgical instruments, etc.) are effected at the M$N 7.50 rate. Nonessential and luxury imports (auto and watch parts, motor cycles, etc.) are effected at the “free” market rate. From time to time, exceptions to these rates have been instituted on an individual country basis for specified commodities.

Payments for Invisibles

In general, payments abroad for invisibles require licenses and are effected at the “free” market rate. Individual loan operations of private banks in dollars and pounds sterling, and the remittance of interest on such transactions up to 6 per cent per annum, do not require licenses and are permitted freely through the “free” market. Invisibles connected with imports are transacted at the rates prevailing for the related import. Insurance for all imports must be made with domestic firms and paid in local currency. Earnings on foreign capital registered after August 28, 1950 and prior to the new legislation governing foreign capital issued on August 26, 1953 may be remitted up to 5 per cent per annum through the “free” market. There is no provision for remittance of income or interest on capital registered prior to August 28, 1950. Capital entering the country in accordance with the new legislation governing capital inflows will, after two years from the date on which it is registered, be entitled to the transfer of earnings up to 8 per cent (net) on the registered amount, to be effected at the “free” market rate prevailing on the date of initial registration. Interest earnings on loans in dollars or sterling up to 8 per cent per annum may be remitted at the “free” market rate. Travelers may take out freely Argentine banknotes, but the export of foreign banknotes requires authorization.

Exports and Export Proceeds

Some exports are controlled in order to take into account the requirements of the domestic market. Exchange proceeds of exports must be received in the appropriate currencies and surrendered. Exporters must receive the foreign exchange proceeds of their exports in the form of a payment order or an irrevocable letter of credit payable in Buenos Aires against shipping documents, at a time at least five working days before shipment. There are exceptions to these arrangements for exports to a small group of countries. Further, 6 per cent of the f.o.b. value of all export proceeds may be paid abroad as exporters’ commissions. Proceeds of certain basic exports (grains, fresh and frozen meats, mineral products, etc.) must be surrendered at the M$N 5.00 rate. Exceptions are the proceeds of wool and raw sheepskins paid for in U.S. dollars or pounds sterling, when such exports are part of combined operations involving government departments; these proceeds must be surrendered 50 per cent at the M$N 5.00 rate and 50 per cent at the M$N 7.50 rate, giving a “mixed” rate of M$N 6.25. Proceeds of minor exports must be surrendered at the M$N 7.50 rate, or at various combinations of either this rate or the M$N 5.00 rate with the “free” market rate, according to the commodity concerned (see Table of Exchange Rates, below). Proceeds of marginal exports (preserved fruits, eggs, woolen and leather manufactures, crushed bone and bone meal, some processed meats and manufactures) are sold in the “free” market.

Proceeds from Invisibles

Exchange receipts from invisibles may be sold in the “free” market. Travelers may bring in freely Argentine and foreign banknotes, but the latter are subject to surrender.

Capital

Exchange derived from incoming capital may be sold in the free market. Private banks may obtain loans in dollars or sterling for minimum periods of 180 days without special authorization from the Central Bank, provided the exchange is transferred from abroad.

Outward transfers of capital require approval of the Central Bank. Loans in dollars or sterling may be transferred later at the free market rate on the date of the initial loan or of its renewal, without special authorization from the Central Bank. Under new legislation pertaining to foreign capital, provision is made for the repatriation of approved new capital after ten years, in accordance with quotas established at the time of entry. Investments abroad by residents normally are not approved.

Table of Exchange Rates (as at December 31, 1953)(pesos per U.S. dollar)
BuyingSelling
5.005.00
Most basic exports (grains, fresh and frozen meats, mineral products, etc.) and wool and raw sheepskin exports paid for in currencies other than U.S. dollars. This rate does not apply to exports of wool and raw sheepskins paid for in sterling when such exports are part of combined operations involving government departments.Preferred imports (coal, coke, fuel oils, and crude petroleum).
6.25 (50% at M$N 5.00 and 50% at M$N 7.50)
Wool and raw sheepskin exports paid for in U.S. dollars or sterling when such exports are part of combined operations involving government departments.
7.507.50
Minor exports (dry and salted oxhides, some processed meats, processed packing house products, designated manufactures, etc.).Specified essential imports.
10.08 (60% at M$N 7.50 and 40% at “Free” Market Rate)
Minor exports (butter, casein, quebracho and urunday extracts).
10.37 (40% at M$N 5.00 and 60% at “Free” Market Rate)
Minor exports (salted horse meat).
11.37 (40% at M$N 7.50 and 60% at “Free” Market Rate)
Minor exports (cheese).
12.015 (30% at M$N 7.50 and 70% at “Free” Market Rate)
Minor exports (tanned cattle hides).
12.16 (20% at M$N 5.00 and 80% at “Free” Market Rate)
Minor exports (frozen horse meat).
13.95 (Controlled “Free” Market Rate)13.95 (Controlled “Free” Market Rate)
Marginal exports (preserved fruits, eggs, woolen and leather manufactures, crushed bone and bone meal, etc.). Invisibles. Capital.Nonessential and luxury imports. All other imports not specifically granted the previous rates. Invisibles. Capital.

Changes during 1953

February

Exchange receipts derived from exports of seeds were made entirely surrenderable at the “free” market rate.

The importation of spare parts and accessories for motors and industrial machinery was liberalized. Imports could be made from any monetary area, and required exchange would be made available immediately in the official market.

February 12

The M$N 6.25 rate, which had been granted to wool exports paid for in U.S. dollars or pounds sterling, was extended to exports paid for in these currencies when such exports were made under combined operations with official agencies.

February 20

Exchange receipts derived from cheese exports, previously surrendered 60 per cent at the M$N 7.50 rate and 40 per cent at the “free” market rate, were now surrenderable 40 per cent at the M$N 7.50 rate and 60 per cent at the “free” market rate.

March

Exchange receipts derived from exports of tanned cattle hides were now surrenderable 30 per cent at the M$N 7.50 rate and 70 per cent at the “free” market rate. Exchange receipts derived from exports of onions from the 1952-53 crop, cotton gauze, and cambric bandages were now surrenderable at the “free” market rate.

April 14

Exchange receipts derived from exports of fish oil, horse offal and horse liver, by-products of linen textiles, edible iodized salt, and rock salt were now surrenderable at the M$N 7.50 rate. Exchange receipts derived from exports of bone ash, pearl buttons, acetic acid, frozen ducks, garlic, and some chemical and pharmaceutical products were now surrenderable at the “free” market rate.

May 14

Exchange receipts derived from wool exports paid for in sterling were again surrenderable at the M$N 5.00 rate, with the exception of exports made through official organizations, which continued to be surrenderable at the M$N 6.25 rate.

July 1

Exchange receipts derived from exports of glycerine were now surrenderable at the “free” market rate.

July 15

Exchange receipts derived from exports of frozen turkeys were now surrenderable at the “free” market rate.

August 14

Exchange receipts derived from exports of electric refrigerators, electric fans with motors made in Argentina, and fluorescent lamps were now surrenderable at the “free” market rate, provided shipment was effected within 180 days. Some modifications were later introduced in this regulation, and the time limit for the period of shipment was eliminated.

August 19

The amount that could be remitted abroad each month to pay for technical and scientific books and magazines was increased from M$N 50 to M$N 100.

August 26

New legislation governing new foreign capital invested in Argentina became effective.

August 28

Exchange receipts derived from exports of sheepskins paid for in sterling, previously surrendered at the M$N 6.25 rate, were now surrenderable at the M$N 5.00 rate, with the exception of exports made through official organizations, which were made surrenderable at the M$N 6.25 rate.

September

Imports covered by exchange permits issued after September 1952 could be effected without the establishment of a letter of credit.

September 4

Exchange receipts derived from exports of refrigerators were no longer surrenderable at the “free” market rate, unless the refrigerators contained motors made in Argentina.

October 16

Regulations implementing the law of August 26, 1953 governing new foreign capital were established.

October 20

Exchange receipts derived from exports of dry or salted oxhides were now surrenderable at the M$N 7.50 rate.

November

Exchange receipts derived from exports of malted milk, powdered and condensed milk, varnishes, letter files, dinner sets, common salt, and rock salt were now surrenderable at the “free” market rate.

November 2

Exchange receipts derived from exports of thoroughbred horses were now surrenderable at the “free” market rate.

November 16

Further regulations were issued implementing the new law of August 26, 1953 governing foreign capital.

November 20

Exchange receipts derived from exports to Paraguay of edible oil, rolled oats, maize starch, glass, boot polish, tanning polish, soap and toilet articles, sanitary ware, legumes, bottles, cooking utensils, yeast, and writing books were now surrenderable at the “free” market rate. Exchange receipts derived from exports to Paraguay of agricultural tools and implements, lead bars and wire, paraffin, some chemicals, and some designated manufactures were to be surrenderable at the M$N 7.50 rate. Exchange receipts derived from exports of wool to Paraguay were now surrenderable 50 per cent at the M$N 5.00 rate and 50 per cent at the M$N 7.50 rate. These export items continued to be subject to less depreciated rates of exchange when exported to all other countries.

November 30

Exchange receipts derived from exports of polo ponies were now surrenderable at the M$N 7.50 rate.

December 3

Exchange receipts derived from exports of salted and cured beef were now surrenderable at the “free” market rate.

December 9

Exchange receipts derived from exports of olive oil were now surrenderable at the “free” market rate.

December 30

Exchange receipts derived from exports of salted horsemeat were now surrenderable 40 per cent at the M$N 5.00 rate and 60 per cent at the “free” market rate. Exchange receipts derived from exports of frozen horsemeat were now surrenderable 20 per cent at the M$N 5.00 rate and 80 per cent at the “free” market rate.

Irish Republic

Origin and Essential Features

Exchange controls and restrictions were introduced in the Irish Republic on September 18, 1939. Under these controls and restrictions all payments to residents of countries outside the Sterling Area required exchanged licenses, and all receipts of exchange in non-Sterling Area currencies had to be offered for surrender. On December 5,1947, the wartime Emergency Legislation on this subject was replaced by Exchange Control Order, 1947, and a supplementary order, which had the effect of bringing the exchange regulations in the Irish Republic more into line with those operating in the United Kingdom. There are not any exchange restrictions on transfers to other territories in the Sterling Area provided there is no outside interest in the transaction; but all payments to non-Sterling Area countries require exchange control approval, which, upon verification of the amount and provided the method of payment is in accordance with the general prescription of currency requirements, is granted automatically for approved imports, contractual payments arising under contracts executed before September 18, 1939 or executed since then with exchange control permission, and many types of noncontractual payments. Export proceeds must be received in a manner prescribed in the regulations, and certain currencies must be sold to an authorized bank.

Exchange Rate System

The Irish Pound is officially at par with the U.K. pound. Exchange rates for other currencies are based on the comparable London quotations.

Administration of Control

Administration of exchange control in the Irish Republic is operated by the Department of Finance, whose permission is required before orders may be placed for goods originating outside the Sterling Area. Much of the authority for approving normal payments is delegated to commercial banks authorized for this purpose. Import licenses, where necessary, are normally issued by the Department of Industry and Commerce if the goods are of an industrial nature, or by the Department of Agriculture if the goods are agricultural in character.

Prescription of Currency

The Irish Republic, as one of the territories of the Sterling Area, conforms to the prescription of currency arrangements and the sterling payments system of the United Kingdom (see United Kingdom, section on Prescription of Currency). However, the proceeds of exports to countries outside the Sterling Area are also acceptable in Irish pounds from the bank account of a person resident in the importing country.

Imports and Import Payments

Certain goods are subject to import prohibitions and others, regardless of the country of origin, are subject to quota restrictions. Most goods, however, do not require an individual import license. Whether or not an individual import license is required, permission must be obtained from the Department of Finance before orders may be placed for goods originating outside the Sterling Area. General exchange control authority has been given for the purchase of a wide range of goods outside the dollar area. Where exchange control authority, either general or individual, is held, the appropriate exchange or permission to credit a nonresident account is granted automatically.

Payments for Invisibles

Payments for invisibles require approval. In general, contractual payments arising under contracts executed before September 18, 1939 or executed since then with exchange control permission are approved without limitation. Payments to other territories of the Sterling Area are not subject to exchange control unless they are for goods originating outside the Sterling Area. Exchange for tourist travel is granted up to £50 per adult for 12 months for use in certain countries.1 Not more than £5 in Irish or U.K. notes may be taken out of the country to a destination outside the Sterling Area.

Exports and Export Proceeds

A system of export licensing is applied to a limited range of goods. Exporters of goods to outside the Sterling Area are required to obtain payment of the value of the goods in the manner prescribed in the regulations within six months of shipment. When payment is received in one of the specified currencies,2 the exchange must be sold to an authorized bank.

Proceeds from Invisibles

There are no specific requirements governing exchange receipts from invisibles, but if these are received in specified currencies2 they must be sold to an authorized bank. The importation of U.K. banknotes through the post or by travelers from any place (other than the United Kingdom) is prohibited, except that travelers may bring with them such notes to a value not exceeding £10. There are no limitations on the import of Irish banknotes, but if a large amount of such notes is carried, the traveler is liable to questioning by the customs, in view of the ban on the exportation of notes beyond a limit of £5.

Capital

All transfers of capital to territories outside the Sterling Area require exchange control approval. Incoming capital, if received in specified currencies,2 must be sold to an authorized bank.

Changes during 1953

February 1

The basic exchange allowance for tourist travel to certain countries was fixed at £25 per adult for the 12 months ending January 31, 1954.

November 1

The basic exchange allowance for tourist travel to certain countries was increased to £50 per adult for the 12 months ending October 31,1954.

Israel1

Origin and Essential Features

Foreign exchange regulations were made effective by the Mandatory Government in 1939. When Israel became an independent state in 1948, exchange control was continued. The exchange rate structure was considerably revised on February 14, 1952 by the establishment of three fixed official rates. Since then premiums and a surcharge applied to certain receipts and payments gradually have become applicable to more and more transactions. On January 1, 1954, the exchange rate system was simplified by the adoption of a single official rate to which, for certain transactions, either one of two premiums or a surcharge applies.

The exchange system also operates through import restrictions, with exchange licensing applied to all trade and nontrade payments. All exports require licenses, and foreign exchange receipts, with certain exceptions, must be surrendered.

Exchange Rate System

The official rate of exchange is Israel Pound 1 = US$1.00, to which, for certain transactions, either a premium of 30 or 80 per cent or a surcharge of 80 per cent (as appropriate) is applied, making other effective rates (see Table of Exchange Rates, below). Dealings in Blocked Accounts take place at unofficial rates of exchange; such accounts are available for use for certain purposes.

Administration of Control

Exchange control is exercised by the Exchange Control Department of the Treasury under the responsibility of the Controller of Foreign Exchange in cooperation with other government agencies and banks authorized for this purpose.

Prescription of Currency

Payments and receipts must be effected in the currency and manner prescribed by the exchange control authorities. Payments with countries with which payments agreements are in force are usually settled in U.S. dollars, Israel pounds, or the currency of the partner country.

Imports and Import Payments

All imports require licenses. Certain of these licenses are issued on the understanding that no official exchange will be granted to pay for the import. In respect of other licenses, exchange is automatically granted. Payments for certain specified imports (essential foodstuffs, fuel, asphalt, sulphur, oilseeds, fertilizers, insecticides, diamonds, etc.) are effected at the official rate; payments for all other authorized imports are effected at the official rate plus a surcharge of 80 per cent.

Payments for Invisibles

Payments abroad require licenses. Exchange allocations for students abroad at the end of 1953 are authorized at the official rate. All other authorized payments are made at the official rate plus a surcharge of 80 per cent. The annual transfer of profits, interest, and repayment of loans to a maximum of 10 per cent of invested capital approved under Clause 21 of the Law for the Encouragement of Foreign Investments (1950) is allowed. The exportation of Israel currency is prohibited.

Exports and Export Proceeds

All exports require licenses. Exchange proceeds in “designated” currencies,2 with certain exceptions, must be surrendered. Proceeds of diamond exports are surrendered at the official rate. A premium of 80 per cent of the official rate is paid on the proceeds of all other exports.

Proceeds from Invisibles

Exchange proceeds from invisibles must be surrendered. A premium of 30 per cent of the official rate is paid for foreign currency received from appeals and charitable donations by institutions, organizations, funds, and similar bodies. A premium of 80 per cent is paid on all other receipts. Tourists visiting Israel are expected to bring with them the amounts of foreign currency that they will need during their stay. The importation of Israel currency is prohibited. Tourists and others visiting Israel who are holders of Blocked Accounts are permitted to draw upon such accounts to the extent of I£25 per day for themselves and a like amount for each member of their families.

Capital

Outward transfers of capital usually are not approved. The investment of foreign capital under the terms of the Law for the Encouragement of Foreign Investments (1950) requires approval if the investor wishes to benefit from the facilities granted by the law; if the investor does not intend to request the application of the law, approval is not required. Foreign capital is surrendered at the official rate plus a premium of 80 per cent. The investment of foreign capital in securities quoted on the Tel-Aviv Stock Exchange is entirely free. Investment in nonquoted securities requires exchange control permission. Investment in mortgages and real estate is subject to the prior consent of the authorities concerned.

Table of Exchange Rates (as at January 1, 1954)(Israel pounds per U.S. dollar)
BuyingSelling
1.000 (Official Rate)1.000 (Official Rate)
Diamond exports.Imports of essential foodstuffs, fuel, asphalt, etc. Authorized expenses of students who were abroad prior to January 1954.
1.300 (Official Rate plus 30% Premium)
Appeals and charitable donations.
1.800 (Official Rate plus 80% Premium)1.800 (Official Rate plus 80% Surcharge)
All other exports and invisibles. Incoming capital.All other imports and invisibles. Outgoing capital.

Changes during 1953

February8

The exchange rate of I£1 = US$1 was made applicable to the exchange proceeds of all exports made since September 1, 1952.

April 5

Tourists would receive a bonus of 80 per cent over and above the $1.00 rate on multiples of If25 resulting from the exchange of foreign currency.

April 16

The limitation of the tourist bonus to multiples of I£25 (see April 5, above) and the system of Special Tourist Letters of Credit were abolished.

May 1

Import Schedules C and D were abolished. Exchange for imports would be provided at the $1.00 rate, except payments for imports of wheat, hard wheat, wheat flour, sugar, and candy sugar, for which exchange would be provided at the rate of $2.80 = I£1.

May 15

Exporters in certain industries were allowed to keep a part or all of their dollar export proceeds for the purchase of raw materials necessary for their export production or to sell them to the authorities at a premium of 80 per cent.

June 7

The benefit of the premium of 80 per cent was extended to the exchange receipts derived from most invisibles.

June 29

New regulations concerning the classification and availability’ of Blocked Accounts and Registered Accounts were issued. Tourists and others visiting Israel who were holders of Blocked Accounts were permitted to draw upon such accounts to the extent of I£25 per day for themselves and a like amount for each member of their families.

July 2

A surcharge of I£0.800 per US$1 was introduced on payments for all imports other than essential foods, fuel, asphalt, sulphur, oilseeds, fertilizers, insecticides, and diamonds.

December 28

The benefit of the premium of 80 per cent was extended to receipts of capital.

December 29

It was announced that, effective January 1,1954, the three fixed official rates introduced February 14,1952 would be canceled, and that the official rate would be changed to I£l = US$1, with a surcharge of 80 per cent on certain payments and premiums of 30 per cent on certain receipts and 80 per cent on others.

New Zealand

Origin and Essential Features

Exchange control was first introduced in New Zealand on December 7,1938. In April 1940 the exchange control system was augmented by the issuance of Finance Emergency Regulations, which were expanded and revised in June 1940. In March 1950 control over Sterling Area currency and securities held by New Zealand residents was abolished, and on August 1, 1950 the trading banks were authorized to make remittances in respect of imports without reference to the exchange control authorities. Since 1951 there have been considerable changes in the regulations affecting imports, mainly by rationing exchange to importers on the basis of their 1950 imports. The restrictive system in New Zealand is exercised through import licensing applied to goods imported from hard currency countries and a few others, and to most imports of motor vehicles, and through exchange licensing applied to payments for all transactions, including imports.

Exchange Rate System

The official rates for the New Zealand Pound in terms of non-sterling currency are based on the fixed rate for sterling-N.Z. pounds and the U.S. dollar-sterling rate in the London market, maintained between the official limits. As at December 31, 1953, the trading banks’ rates for telegraphic transfers on London were £NZ 100/7/6 buying, £NZ 101/-/- selling, per £100, and for U.S. dollars, US$2.8051 buying, US$2.7726 selling, per £NZ 1.

Administration of Control

Exchange control authority is given to the Minister of Finance, who, in accordance with the terms of the regulations, has delegated it to the Reserve Bank of New Zealand; however, much of the routine supervision is done by the trading (commercial) banks.

Prescription of Currency

New Zealand, as one of the territories of the Sterling Area, conforms to the prescription of currency arrangements and the exchange payments system of the United Kingdom (see United Kingdom, section on Prescription of Currency).

Imports and Import Payments

Virtually all imports from “scheduled” countries1 and most imports of motor vehicles require import licenses. For these licenses, exchange is made available in full. Certain goods from other, i.e., nonscheduled, countries also require import licenses, which are issued on the basis that they carry no assurance that exchange will be provided. The allocation of exchange to pay for imports (regardless of whether or not an import license is required) is subject to a system of exchange rationing by which the trading banks may not, without the approval of the Reserve Bank, sell to any importer during 1953 more than 40 per cent2 of the amount of exchange sold in 1950 to that same importer, except for the import of motor vehicles and the import of goods paid for under “third party certificates” (used when a commodity is imported through an agent). For exchange exceeding this “basic” ration, application must be made to the Reserve Bank. In addition to these limitations, payments may be made only in the manner prescribed in the regulations (see section on Prescription of Currency, above).

Payments for Invisibles

Payments for invisibles require the approval of the Reserve Bank. In general, contractual payments are approved without limitation. Payments to other territories of the Sterling Area are not restricted, except for capital exports by N.Z. residents, travel allowances, and a few minor items. Noncontractual remittances to countries outside the Sterling Area are treated on their merits, very strict scrutiny being given to remittances to hard currency areas.

Exports and Export Proceeds

All exports require export licenses. These are issued by the Customs Department provided the transaction is being cleared through a trading bank through which the net export proceeds will be received in a manner conforming to the regulations (see section on Prescription of Currency, above) and the foreign exchange surrendered.

Proceeds from Invisibles

All receipts of non-Sterling Area currencies must be offered to the Reserve Bank; they may be sold to a trading bank in New Zealand, but they may not otherwise be sold or dealt in without permission. No control is exercised over the disposal of Sterling Area currency receipts other than from exports.

Capital

Transactions in non-sterling securities owned by N.Z. residents require the prior permission of the Reserve Bank. Capital remittances to non-Sterling Area countries normally are not approved. Capital receipts in non-Sterling Area currencies must be surrendered or declared to the Reserve Bank. No control is exercised over the disposal of receipts in Sterling Area currencies.

Changes during 1953

June 4

The basic exchange allocation for imports in 1954 was announced as 50 per cent of remittances in 1950. In addition, a list of 15 items was announced for which it would not be necessary to apply for allocations.

July 31

Uruguay and Yugoslavia were removed from the list of “scheduled” countries (see section on Imports and Import Payments, above).

November 11

A 50 per cent increase in motor vehicle import licenses was announced for 1954.

November 12

The basic exchange allocation for imports in 1954 was raised to 75 per cent of remittances in 1950.

Various dates

Additional items were added to the list of goods exempted from import licensing if imported from soft currency countries.

Portugal

Origin and Essential Features

Exchange controls were introduced in Portugal September 24, 1914 and were revoked October 18, 1937. During World War II and until 1947, a few controls were maintained—in most cases imposed by the terms of bilateral payments agreements. In the summer of 1947, controls were re-established to the effect that any transaction in sterling or dollars had to be directly related to the Portuguese Monetary Area and the Sterling or Dollar Area, respectively. By the late summer of 1947, an increased number of goods was subject to import licensing restrictions. On February 9,1948, general registration of imports and exports was introduced. Subsequently, imports from the dollar area or payable in hard currencies were made subject to restrictions, while imports from EPU countries, or payable in EPU currencies, were liberalized.

The exchange rate system is uniform. Settlements on account of merchandise transactions and invisibles are effected in a currency and a manner prescribed by the provisions of bilateral trade and payments agreements or determined on the basis of the country of origin or destination of the goods or services involved. All imports are subject to previous registration. Some imports from EPU countries and their overseas territories and most imports from all other countries are subject to individual licensing; payments to EPU countries for many categories of invisibles are permitted freely.

All exports are subject to a registration requirement. Certain exports to any country and all exports to other than EPU countries payable in a currency of any EPU country are subject to individual licensing. Export proceeds as well as exchange receipts from invisibles must be surrendered. A specified percentage of proceeds accruing from specified exports to EPU countries is temporarily blocked.

Transfers of capital require approval; however, such transfers to countries with which Portugal has payments agreements are permitted within the terms of the related agreements. Exchange receipts from capital must be surrendered.

Exchange Rate System

The parity of the Escudo in terms of the U.S. dollar is Esc 28.75215 = US$1. Official rates are Esc 28.60 buying, Esc 28.95 selling, per US$1. Exchange rates are uniform.

Exchange Control Territory

Portugal and Portuguese overseas territories1 constitute a single exchange control territory, the “Portuguese Monetary Area;” between the components of this area, exchange restrictions practically do not exist. The exchange control regulations of Portugal are applied almost uniformly throughout the Portuguese Monetary Area, current payments between its various territories being effected through controlled accounts.

Administration of Control

Trade controls are administered by a Commission of Economic Coordination in the Ministry of Economy and the Council of Ministers, as policy-making bodies, and by a Directorate-General of Commerce in the Ministry of Economy, which administers trade controls. Import and export licenses are issued by the Department for Licensing Foreign Trade, operating within the Directorate-General’s office. Exchange controls are administered by the Ministry of Finance and the Bank of Portugal, with the assistance of commercial banks authorized for this purpose.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in a currency and in a manner prescribed by the provisions of bilateral trade and payments agreements or determined on the basis of the country of origin or the destination of the goods or services involved. Any deviation from the general regulations in this matter requires the approval of the Bank of Portugal.

Imports and Import Payments

All imports are subject to registration, mainly in order to enforce the prescription of currency regulations. The presentation of the registration form to the customs enables the import to be cleared. Some imports from EPU countries and their overseas territories,2 imports from other than EPU countries payable in a currency of any EPU country, and most imports from other countries are subject to individual licenses, which are issued with the registration form. Most goods of a value less than Esc 2,500 may be imported freely from EPU countries and their associated territories. Appropriate exchange is granted automatically for authorized imports.

Payments for Invisibles

All payments on account of invisibles that are made in foreign currency or by crediting nonresident accounts and that exceed Esc 2,500 are subject to individual licensing. For lesser amounts, such payments are made if the applicant undertakes to produce documentary evidence of the obligation, should proof be required later. Payments to countries with which Portugal has payments agreements are permitted freely within the terms of the related agreements. Payments in favor of persons residing in any of the EPU countries are permitted freely, without any limitation as to amount, on account of costs incidental to exports and imports, and up to Esc 100,000 on account of various categories of current payments. Travelers may take out any amount in Portuguese and foreign banknotes.

Exports and Export Proceeds

All exports are subject to registration, mainly in order to secure the enforcement of the prescription of currency and surrender obligation regulations. Certain exports to any country and all exports to other than EPU countries payable in an EPU currency are subject to individual licensing. Export proceeds have to be surrendered. Thirty per cent of proceeds accruing from specified exports (above the value of Esc 2,500) paid in the currency of an EPU country or in escudos by debiting the escudo account of a person domiciled in an EPU country, as well as 30 per cent of proceeds from specified exports to Austria, the Federal Republic of Germany, Greece, Italy, and Turkey expressed in any third currency, and to Switzerland if paid to the account of the Bank of Portugal with the Swiss National Bank, are blocked. Their deblocking is effected as soon as Portugal’s favorable balance toward EPU falls below a specified limit.

Proceeds from Invisibles

Payments due from persons residing in EPU countries can be received freely by Portuguese residents on account of costs incidental to exports and imports, without any limitation as to the amount, and on account of a variety of other categories of invisibles, up to Esc 100,000. The individual permit of the Bank of Portugal is required in all other cases. Exchange receipts from invisibles must be surrendered. Travelers may bring in any amount in Portuguese and foreign banknotes.

Capital

Transfers of capital to countries with which Portugal has payments agreements are permitted freely within the terms of the related agreements. Other capital transfers require approval. Exchange receipts from capital must be surrendered.

Changes during 1953

January 28

A ministerial decree was published maintaining in force during 1953 the arrangements concerning the partial blocking of the proceeds of specified exports to EPU countries.

Spain

Origin and Essential Features

Controls were introduced in Spain on May 31, 1931; since then they have been applied continuously, with various modifications. On December 3, 1948 a system of multiple exchange rates based on categories of merchandise was established. By a decree of July 21, 1950, a “free” exchange market was introduced for specified currencies. The system was revised November 1, 1951; since then payments on account of merchandise have been effected at either “free” market or fixed rates or various percentage combinations of these; this multiple exchange rate system comprises altogether seven effective buying rates and seven effective selling rates (see Table of Exchange Rates, below).

All imports and payments for invisibles are subject to individual licensing. All exports are subject to individual licensing, and exchange proceeds must be surrendered. Foreign capital transactions also are subject to license.

Exchange Rate System

The official basic rates are Pesetas 10.95 buying, Pesetas 11.22 selling,1 per US$1; the use of these rates is limited to government transactions. For other purposes, there is an official buying rate of Pts 21.90 per US$1 and three official selling rates, Pts 16.425, Pts 21.90, and Pts 25.00, per US$1. Other effective rates are produced by combining certain percentages at one of these rates with the balance at a “free” official market rate, currently Pts 38.95 per US$1 (see Table of Exchange Rates, below).

Only authorized banks are permitted to operate on the “free” market, acting as intermediaries between buyers (who must have permits from the Spanish Foreign Exchange Institute) and sellers of specified currencies.2 As the demand and supply of “free” currencies are subject to the control exercised by the authorities over exchange transactions, the formation of “free” market rates is affected by the decisions of the Spanish trade and exchange control authorities and the intervention of the latter in the exchange market.

Exchange Control Territory

The Peninsular Territories of the Spanish State, the Canary Islands, the Balearic Islands, Ceuta, Melilla, the Spanish Zone of Morocco, and the Spanish colonies constitute a single exchange control territory, the “Spanish Monetary Area.”

Administration of Control

On a policy level, controls are administered by the Ministry of Finance, the Ministry of Commerce, and the Spanish Foreign Exchange Institute; on a technical administrative level, by the Spanish Foreign Exchange Institute, the General Department of Commerce and Tariff Policy in the Ministry of Commerce, and by authorized banks.

Prescription of Currency

Settlements on account of merchandise transactions and invisibles are effected in the currency and in the manner prescribed in the provisions of bilateral trade and payments agreements, or determined on the basis of the country of origin or destination of the goods and services involved. The prescription of currency requirements are operated through an individual licensing system, to which all categories of exchange payments are subject.

Imports and Import Payments

All imports require import and exchange licenses, which are issued in combined form by the Spanish Foreign Exchange Institute after consultation with the General Department of Commerce and Tariff Policy. Foreign exchange is made available for authorized imports through official allocations or the “free” market mechanism. Subject to the approval of the Spanish Foreign Exchange Institute, nonresidents can import essential materials and use the proceeds accruing from their sale for specifically determined expenses and investments in Spain. Specific industries grouped on a national or regional basis are permitted to make imports needed for production of their export goods out of their own retained exchange (see section on Exports and Export Proceeds, below).

Payments for Invisibles

All transfers abroad and payments by residents in favor of nonresidents on account of invisibles are subject to individual licensing. Practically all of them are effected at the “free” market rate. Persons traveling abroad may take with them a maximum of Pts 2,000 in notes of the Bank of Spain.

Exports and Export Proceeds

All exports are subject to individual licenses issued by the General Department of Commerce and Tariff Policy. This requirement is established mainly in order to determine the exchange rate applicable to the proceeds, and to enforce currency prescription and surrender regulations. Proceeds accruing from exports must be surrendered to authorized banks or sold through them on the “free” exchange market. In accordance with the arrangement called “Special Operations,” specific industries grouped on a national or regional basis are permitted to retain their export proceeds to be used for payment of imported raw materials or other goods needed by them for their own production; in certain cases, special rates for specified exports are determined. There are altogether 10 “Special Operations” arrangements in existence, 7 of which have a regional applicability.

Proceeds from Invisibles

All exchange proceeds must be sold on the “free” market if payable in currencies dealt in on that market, or surrendered to authorized banks if payable in other currencies. The “free” market rates are applicable to the purchase of proceeds accruing from practically all categories of invisibles. Persons may bring in a maximum of Pts 10,000 in notes of the Bank of Spain.

Capital

All outward capital transfers are subject to individual approval. All inward and outward private capital transfers must be effected at the “free” market rates. Special facilities are accorded to investments effected by nonresidents in Spain through the importation of essential goods (see section on Imports and Import Payments, above).

Table of Exchange Rates (as at December 31, 1953)(pesetas per U.S. dollar)
BuyingSelling
10.95 (Official Basic Rate)11.22 (Official Basic Rate plus Commission)
….Government payments, including imports of rationed foodstuffs.
16.425 Imports in Group A: coal, coke, and pitch.
21.90 (Special Export Rate)21.90
Exports not listed in Groups 1-5.….
23.605 (90% at Pts 21.90 and 10% at “Free” Official Market Rate)
Exports in Group 1: chestnuts, cocoa, cork (semimanufactured products), fresh fish, fruit trees, livestock, olives, etc.25.00 Imports in Group liquid fuels and tobacco.
25.435 (60% at Pts 16425 and 40% at “Free” Official Market Rate)
27.015 (70% at Pts 21.90 and 30% at “Free” Official Market Rate)

Exports in Group 2: almond oil, apricots, cherries, cider, cork manufactures, figs, dried fish, gypsum, peaches, pears, plums, potash, vegetables, etc.
Imports in Group B: aluminum scrap, copper, copper alloys, creosote, ores (metallic), phosphates, metal scrap, seeds, sleepers, tinplate, etc.

28.72 (60% at Pts 21.90 and 40% at “Free” Official Market Rate)
30.425 (50% at Pts 21.90 and 50% at “Free” Official Market Rate)Imports in Group C: aluminum, chromium, cobalt, ferroalloys, fibers (hard), fishing lines, threads and nets, insecticides, jute, etc.
Exports in Group 3: almonds, bananas, chemicals, clays and silicates, tanned hides, grapes, lemons, essential oils, onions, oranges, paper, peanuts, tomatoes, etc.
32.13 (U0% at Pts 21.90 and 60% at “Free” Official Market Rate)
33.835 (80% at Pts 21.90 and 70% at “Free” Official Market Rate)

Exports in Group 4: berets, ceramics and glass, hats, shoes and leather articles, perfumes, vinegar, wine, etc.
Imports in Group D: raw materials for abrasives; asbestos, asphalt, fertilizers, hemp, lubricants, railway materials, tar, vaseline, etc.
37.245 (10% at Pts 21.90 and 90% at “Free” Official Market Rate)
Exports in Group 5: books, handmade rugs, wolfram, etc.
38.95 (“Free” Official Market Rate)38.95 (“Free” Official Market Rate)
Invisibles. Capital.All other imports. Authorized invisibles and capital.
Note: The above rates apply to exchange receipts in the specified currencies.

Changes during 1953

May 27

The effective exchange rate applicable to payments for imports of crude rubber and fertilizers was revised by transferring these commodities from Group C to Group D.

Switzerland

Origin and Essential Features

In Switzerland there is no over-all control of foreign exchange. However, in practice exchange is controlled in respect of countries with which Switzerland has bilateral agreements or in respect of which Switzerland has enacted autonomous regulations. Since October 14,1933, a law authorizing the Swiss Federal Council to restrict imports and exports, to conclude payments agreements, and to control payments relating to countries that have restricted their payments constitutes the legal basis of Switzerland’s payments and trade control regulations. While the number of bilateral agreements has gradually increased and now covers Switzerland’s trade and/or payments with 22 countries or monetary areas,1 and while Switzerland has regulated her payments traffic with three other countries,2 payments may be freely made to and accepted from the rest of the world. Though imports of a considerable number of goods are controlled, import licenses are, with relatively few exceptions, granted without quantitative restriction. Imports from EPU countries are liberalized in accordance with the OEEC code of liberalization. The export and re-export of a number of goods are subject to control.

Exchange Rate System

The gold content of the Swiss Franc is established at 63/310 (= 0.20322 …) grams of fine gold.

The Swiss National Bank maintains the U.S. dollar rate in a free market between limits of Sw fr 4.28 buying, and Sw fr 4.46 selling, per US$1, but since September 1949, the upper limit of the dollar has in practice been Sw fr 4.3728 per US$1, corresponding to the gold parity. The rate on December 31, 1953 was Sw fr 4.2875 per US$1. In accordance with the provisions of several payments agreements, official fixed rates for specified currencies are applied. In a few cases, variable rates are in use; these rates are based on the exchange rate system of the respective countries.

Switzerland participates with Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Norway, Sweden, and the United Kingdom in a multilateral foreign exchange arbitrage arrangement, under which authorized banks in these territories may conclude spot transactions, and forward transactions for up to three months’ delivery, with other authorized banks in any of these territories.3 The spot exchange rates fluctuate between the official limits agreed by the exchange authorities of the countries concerned, while the forward premiums and discounts are left to the interplay of market forces.

Exchange Control Territory

For all purposes of import, export, and payments control, the Principality of Liechtenstein is included in the Swiss customs territory for the duration of the treaty between Switzerland and the Principality of Liechtenstein of March 29, 1923, concerning the union of the Principality of Liechtenstein with the Swiss customs territory.

Administration of Control

The authority to impose measures for the control of imports, exports, and payments is vested in the Swiss Federal Council acting on the proposals of the Federal Political Department and, especially, of the Federal Department of Public Economy. The Swiss National Bank is the executive authority in matters of currency, and the Swiss Compensation Office, together with the authorized banks, is entrusted with the operative part of payments control.

Prescription of Currency

The currency and manner of settlement on account of merchandise transactions and invisibles with certain countries are prescribed in the sector of controlled payments in accordance with the provisions of the related payments agreements and/or by the Swiss regulations. In all other cases, settlements are not subject to regulations involving the prescription of currency.

Nonresident Accounts

Nonresident accounts established and operated in accordance with the exchange control regulations applicable to the sector of controlled payments are controlled, but other nonresident accounts are free of control.

Imports and Import Payments

A considerable number of goods are admitted into Switzerland on the basis of import licenses only; but in accordance with Switzerland’s present liberal import policy, licenses are, generally speaking, granted without quantitative limitation. However, quotas are established for certain agricultural products and, as. far as industrial products are concerned, for heavy motor vehicles and agricultural tractors.

Settlements are effected automatically for authorized imports from countries to which the Swiss control regulations are applicable, i.e., the sector of controlled payments. Payments for imports from all other countries can be effected freely through the free market.

Payments for Invisibles

Payments to countries in the sector of controlled payments are permitted within the terms of the related agreements and/or the Swiss regulations. In all other cases, payments can be effected freely. The importation of Swiss or foreign banknotes is free.

Exports and Export Proceeds

The export (including re-export) of many goods is subject to export control through individual licenses. This export licensing system is operated in part with the assistance of appropriate trade organizations. Proceeds accruing from exports to controlled payment countries are converted into Swiss currency in observance of the existing regulations. Other export proceeds are freely disposable.

Proceeds from Invisibles

Proceeds accruing from invisibles and orginating in controlled payment countries are converted into Swiss francs in observance of the existing regulations, whereas such proceeds from other countries are freely disposable. The exportation of Swiss and other banknotes is free.

Banknotes

Foreign banknotes are negotiated freely in Switzerland at rates determined by the interplay of supply and demand.

Capital

Transfers of capital to or from countries with which payments are controlled require licenses if they are effected through the sector of controlled payments; however, transfers of capital not exceeding Sw fr 500,000 to such countries do not require licenses. Transfers of capital to or from other countries can be effected freely.

Changes during 1953

April 20

The Federal Coinage Law of December 17, 1952 came into effect, establishing the gold content of the Swiss franc at 63/310 grams of fine gold.

May 18

Authorized banks were permitted to conclude spot foreign exchange arbitrage transactions with authorized banks in Belgium, Denmark, France, the Federal Republic of Germany, the Netherlands, Sweden, and the United Kingdom, in any of their currencies or against Swiss francs. Balances on the controlled Swiss franc accounts of authorized banks in these territories could be transferred freely to other controlled Swiss franc accounts of other authorized banks in any of these territories.

October 5

The multilateral foreign exchange arbitrage arrangements were extended to include forward transactions not exceeding normal spot usance by more than three months.

December 14

Norway and Norwegian kroner were included in the multilateral foreign exchange arbitrage scheme (see May 18, above) for spot transactions only.

The countries for which this basic exchange allocation for tourists is available are listed as follows: Argentina, Austria, Belgian Monetary Area, Brazil, Chile, Denmark and the Faroe Islands, Egypt, Eritrea, Ethiopia, Finland, French Franc Area, Federal Republic of Germany, Greece, Iran, Israel, Italian Monetary Area, Netherlands Monetary Area, Norway, Paraguay, Peru, Portuguese Monetary Area, Saudi Arabia, Spanish Monetary Area, Sudan, Sweden, Switzerland and Liechtenstein, Free Territory of Trieste, Turkey, Uruguay, and Vatican City.

These specified currencies are listed as follows: Belgian francs, Canadian dollars, Congolese francs, deutsche marks, francs of the French Franc Area, French Somali Coast (Djibouti) francs, Indo-Chinese piastres, Luxembourg francs, Netherlands, Surinam, and Netherlands Antilles guilders, Panamanian dollars, Philippine pesos, Pondicherry rupees, Portuguese escudos, Swiss francs, and U.S. dollars.

In view of the important changes which became effective January 1, 1954, this survey represents the situation as of that date.

“Designated” currencies are those of the following countries: Australia, Belgian Congo, Belgium, Brazil, Canada, Czechoslovakia, Denmark, France, Iceland, India, Ireland, Luxembourg, Netherlands, Netherlands West Indies, New Zealand, Norway, Pakistan, Panama, Philippine Republic, Portugal, Sweden, Switzerland, Union of South Africa, United Kingdom, United States, and Uruguay.

These countries are listed in the N.Z. regulations as follows: Albania, Argentina, Bolivia, Bulgaria, Canada, Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, French Somaliland, Germany (Russian Zone), Guatemala, Haiti, Honduras, Hungary, Iran, Japan, Korea, Liberia, Mexico, Nicaragua, Panama, Philippine Republic, Poland, Rumania, Tangier, U.S.S.R., United States, and Venezuela.

The percentage for 1954 was raised to 50 (as announced on June 4, 1953), and then to 75 (as announced on November 12, 1953).

The Azores, Madeira, the Cape Verde Islands, Portuguese Guinea, São João Baptista de Adjuda, the Islands of São Tomé and Principe, Angola, Mozambique, Portuguese Indies (Goa, Damão, Diu), Macao, and Portuguese Timor.

These countries are listed as follows: Austria, Belgium, Denmark, France, Federal Republic of Germany, Greece, Iceland, Italy, Ireland, Luxembourg, Netherlands, Norway, Sweden, Switzerland, Trieste, Turkey, United Kingdom, and their overseas territories.

Pts 10.95 plus Pts 0.27 (banking commission of the Spanish Foreign Exchange Institute).

The currencies dealt in on the “free” market are as follows: Algerian francs, Belgian francs, Canadian dollars, Danish kroner, deutsche marks, French francs, Italian lire, Mexican pesos, Moroccan francs, guilders, Norwegian kroner, escudos, Swedish kronor, Swiss francs, pounds sterling, and U.S. dollars; Egyptian pounds, escudos, and Swiss francs in agreement accounts; pounds sterling in the “Iceland” account; U.S. dollars of account with Bolivia, Brazil, Cuba, Finland, Greece, Italy, Mexico, Paraguay, and Turkey; and banknotes in bolivares, Colombian pesos, cruzeiros, soles, and Uruguayan pesos.

These are listed as Argentina, Austria, Belgian Monetary Area, Bulgaria, Czechoslovakia, Denmark, Egypt, Finland, French Monetary Area, Federal Republic of Germany, Greece, Hungary, Italy, Netherlands Monetary Area, Norway, Poland, Rumania, Spanish Monetary Area, Sweden, Turkey, United Kingdom and other territories of the Sterling Area, and Yugoslavia.

These are Eastern Germany, Iran, and the Portuguese Monetary Area.

Norway was not included in the forward exchange arrangements until January 20, 1954.

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