International Monetary Fund. External Relations Dept.
Published Date:
September 1950
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The exchange controls and restrictions applied by member countries which have availed themselves of the transitional arrangements under Article XIV, Section 2 of the Articles of Agreement are reviewed in the subsequent pages. It has not been possible under prevailing conditions to cover the exchange controls and restrictions in effect in China. In view of the close relationship between the exchange policies of Belgium and Luxembourg, the exchange controls and restrictions of these two members are surveyed jointly. No separate surveys have been prepared for non-metropolitan territories, with the exception of Hong Kong, where the exchange controls and restrictions vary significantly from those of the United Kingdom.

As previously indicated,9 there is no difference in the practical effects of restrictions maintained under Article XIV, Section 2 and those under Article VIII, Section 2 or 3 of the Articles of Agreement. They are, therefore, jointly covered in the country surveys. However, the inclusion of a restriction in this Report should not be construed as indicating that the Fund has in each case given approval where such was required.

In order to present a complete picture of each exchange system, the country surveys also mention significant controls and restrictions on capital transfers. Such controls may be exercised by members under Article VI, Section 3 of the Articles of Agreement, if they do not restrict payments for current transactions or unduly delay transfers of funds in settlement of commitments. These restrictions are not dealt with in any great detail. Transfers of dividends, interest and other investment income are, in accordance with Article XIX(i) of the Articles of Agreement, considered as current invisible transactions and are discussed in the country surveys in the relevant section on invisibles. However, in some cases, where the exchange restrictions applied to invisible transactions are very closely connected with the restrictions on capital transfers, they have been discussed in the section on capital.

In order to present a clear description of exchange controls and restrictions in member countries, a standardized pattern has been followed wherever practicable. It consists of a uniform presentation of the restrictive features of each system, using a consistent terminology for describing similar practices.

In the interest of standardization, each study on exchange controls and restrictions is divided into the following sections: Date of Introduction, Nature of Restrictive System, Exchange Rates, Exchange Payments (with subdivisions), and Exchange Receipts (with subdivisions). Additional sections on Exchange Control Territory, Non-Resident Accounts, Domestic Banknotes and Foreign Banknotes have been included in a few country surveys.

Under Date of Introduction, the dates when exchange controls and restrictions were originally introduced and when last they were significantly revised are cited. These dates serve to indicate the period of the existence of exchange restrictions, without attempting a complete historical review of exchange controls and restrictions.

Under Nature of Restrictive System, the prevailing types of restrictions are classified in accordance with the preceding discussion and the essential features of the restrictive system, particularly of those applying to trade and invisibles, are briefly described. Multiple currency practices on the selling and buying sides, where they exist, and requirements concerning export proceeds and export licensing are also mentioned.

Under Exchange Rates, the par value, where one exists, is expressed in terms of United States dollars, and the official buying and selling rates, if any, are quoted in the same manner. General remarks are also made wherever applicable concerning the important features of the exchange rate system, but the surveys of member countries with several effective rates of exchange include a more detailed tabulation of these rates and their applicability under the separate section Table of Exchange Rates at the end of the particular survey. The fixed buying and selling rates quoted are those effective as of the end of 1949, while the fluctuating rates quoted represent average rates for the month of December 1949, unless otherwise noted. Exchange rates in illegal markets are not covered, as they are not deemed to be part of the official exchange systems concerned, even if they assume considerable importance in some member countries.

Under Exchange Payments, the exchange restrictions applied to international payments are described. Trade restrictions closely related to exchange restrictions are also mentioned. The term “import license” is used to describe individual permits granted by the trade authorities to effect the importation of a given commodity. When it is stated that only certain imports require import licenses, it is to be understood that all other imports are free of restrictions of this type, unless otherwise explained. In various countries the legislation concerned uses different technical terms, such as “free lists” or “open general licenses,” to describe arrangements whereby imports and other international transactions are exempt from the restrictive application of the licensing requirements. In the interest of uniformity, such arrangements are referred to by the standard expression “certain imports (or other transactions) are freely permitted.” The expression “exchange is automatically granted for authorized imports” means that exchange is freely allocated to those imports which are permitted by individual or general import licenses, or which do not require import licenses.

The term “exchange license” is used to describe the individual permits granted by the exchange authorities to effect exchange payments. Where exchange payments are exempt from individual permits, or can be freely effected by specified categories of residents or in specified currencies without any limitation or up to certain limits, the standard expression “foreign exchange is freely granted up to certain limits” or its appropriate equivalent is used. As in the case of import regulations, the differences in national terminology in this respect have been avoided.

In relation to capital payments, the term “require approval” is used to express the fact that permits are necessary to effect such payments either on behalf of residents or non-residents. The term “approval” has a broader meaning than “licenses,” as it may include special conditions connected with the transfer of capital.

Under Exchange Receipts, special requirements relating to exchange proceeds from exports, invisibles and capital are described. Where the exchange control regulations include special requirements that the proceeds must be obtained in a prescribed manner, an expression such as “the exchange proceeds of exports must be received in an appropriate currency or from an appropriate non-resident account” is used. The term “surrender” is used to denote the compulsory sale of exchange proceeds at specified rates of exchange. In some countries, the “surrender” of exchange proceeds is not required, but these proceeds may not be retained indefinitely or used for international payments without specific license. Alternatively, it may be required that certain exchange proceeds be sold in a free market. These cases are specifically mentioned in the country surveys.

Under Exchange Control Territory, the extent of applicability of a given national system of exchange controls and restrictions is explained when it covers two or more sovereign or autonomous territories and when a resident of one country is treated as a resident of another country for the purposes of exchange control.

Under Non-Resident Accounts, special arrangements governing payments through the accounts of non-residents are described where they play an important part in settling payments between non-residents. In two country surveys, a section on Banknotes is added to outline special provisions relating to the use of foreign or domestic banknotes in international transactions.

The terms “resident” and “non-resident” have been used throughout the country surveys, even though the regulations of certain countries refer to “exchange nationals” and “exchange foreigners,” or similar designations. In general, countries apply these terms on the basis of the normal domicile or the active place of business of the individual or legal entity concerned, but other criteria such as nationality and length of residence may also be taken into account.

In preparing these country surveys, it was found necessary to establish a date beyond which changes in the exchange systems would not be taken into account. December 31, 1949, was chosen as the appropriate date for this purpose, and all country surveys are factual as of that date.

See page 1.

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