Explanatory Note

International Monetary Fund. External Relations Dept.
Published Date:
September 1955
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The descriptions of individual exchange systems which follow relate generally to the position in each country as at December 31, 1954, but in a few surveys the position is described as at a later date in order to take account of significant developments which took place early in 1955 and which could not be indicated easily by means of footnotes. In drafting these surveys, a standardized framework has been employed as far as practicable. For this purpose, each system is described under the following headings: Origin and Essential Features, Exchange Rate System, Administration of Control, Prescription of Currency, Imports and Import Payments, Payments for Invisibles, Exports and Export Proceeds, Proceeds from Invisibles, Capital, and Changes during 1954. Sections on Exchange Control Territory, Nonresident Accounts, and Banknotes appear in the surveys of countries where these topics have particular significance. A Table of Exchange Rates appears in the surveys of most countries having a multiple exchange rate structure. The subject matter included under each of the above headings is indicated below. In a few surveys, the two sections on invisibles are combined or the titles of the section headings are varied, where this has seemed appropriate. In the survey of the United Kingdom’s exchange system, a section on Commodity Markets and Transit Trade is included.

The surveys of individual exchange systems are presented in three sections. The first comprises those member countries of the Fund which, for the most part, maintain their existing restrictions under the postwar transitional period arrangements of Article XIV of the Fund Agreement. In some of these countries, however, restrictions to which the Fund has given approval under Article VIII of the Agreement may also be in operation. The second section comprises those member countries which do not apply any restrictions under Article XIV; they are referred to as “Article VIII countries.” The third section comprises certain countries which, at the time this Report was written, were not members of the Fund.

As in previous years, an attempt has been made to maintain a consistent terminology for the description of similar documents or practices, but this has not been pressed to the point where the use of any expression would conflict with the term used by the country concerned; expressions such as “exchange license” and “import license” as used in these country surveys do not, therefore, reflect any interpretation of the actual function of such documents. The word “license” is, however, used to cover all granting of permits or permissions, either general or individual, whether or not they are conveyed in any actual document or merely consist in conforming to certain requirements under the supervision of some authority, in circumstances where, without that conformity, the transaction or payment could not take place.

Under Origin and Essential Features, a brief survey of developments in each country’s system and a short summary of its main features are provided. However, the summary is not to be taken as indicating that the Fund necessarily regards all the features of the system as desirable or has given specific approval to them, or as implying that all the practices described are necessarily under the Fund’s jurisdiction.

Under Exchange Rate System, the par value, where one has been agreed with the Fund, and/or the official exchange rates are given, usually in terms of the U.S. dollar, together with a reference to other rates which may be essential to the country’s exchange rate system. In the surveys of most countries with a multiple exchange rate system, further details are given in the section, Table of Exchange Rates (see below). The rates quoted are those effective as at December 31, 1954, unless stated otherwise.

Under Exchange Control Territory, the extent of applicability of the exchange control is explained when it covers two or more sovereign or autonomous territories whose residents have common rights and obligations under the exchange control regulations.

Under Administration of Control, some indication is given of the authorities responsible for policy and administration of the controls and of the extent to which their powers are delegated for practical working purposes.

Under Prescription of Currency, the requirements affecting the selection of the currency and method of settlement for transactions with other countries are described. It will be seen that the degree to which these are significant and effective varies considerably from country to country. Where a country has concluded payments agreements with other countries or monetary areas, the terms of these agreements often lead to the prescription of currency for specified categories of payments to and from the countries concerned. In most surveys, the bilateral payments agreements of the country are listed either in the text or in a footnote. For a country whose currency has international importance, the prescription of currency arrangements involve the use of its own currency held by nonresidents in accounts which are designated geographically, according to the residence of the account holder, on either a country or a regional basis. Payments to and from such nonresident accounts are then regarded as equivalent to settlements in the currency of the country or the related area of the nonresident account holder.

Under Nonresident Accounts, an indication is given of the manner in which the country regards the accounts in its currency of account holders not regarded as resident in that country, and the facilities and limitations attached to such accounts. Where there is more than one type of nonresident account, the nature and operation of the various types are described.

Under Imports and Import Payments, import licensing requirements are described briefly, and details are given of the additional requirements attached to the making of payments in respect of imports. The term “open general license,” which is used in some countries, indicates arrangements whereby certain imports or other international transactions are exempt from the restrictive application of licensing requirements, in contrast 'to an “individual license,” which may be either given freely or restricted in its issue, according to administrative decisions.

Under Payments for Invisibles, action in the matter of permitting payments abroad for current invisible transactions is described briefly. In most of the surveys, any limitations on the export of foreign and domestic banknotes are given.

Under Exports and Export Proceeds, the application of export licensing, where this is operative, is indicated, together with a brief outline of the requirements attached to the proceeds derived from exports. The expression “exchange receipts must be surrendered” is used to indicate that the recipient is required by the regulations to sell his foreign exchange against local currency, usually at the official rate, to the central bank or to a commercial bank or exchange dealer authorized for this purpose. In some countries there is a requirement that the proceeds be sold in a free market, but in such cases the expression “surrendered” is not used.

Under Proceeds from Invisibles, any conditions governing exchange derived from invisible transactions are given. In most of the surveys, any limitations on the import of foreign and domestic banknotes are described.

Under Capital, a general indication of the special arrangements or limitations attached to international receipts and payments in respect of capital items is given. Where special arrangements for foreign capital also cover the income thereon, they are dealt with under this heading rather than under the headings, Payments for Invisibles and Proceeds from Invisibles.

Under Banknotes, a heading included in only a few of the country surveys, special arrangements concerning the negotiation of foreign banknotes within the country are described briefly.

Under Table of Exchange Rates, which is provided for most countries having a multiple exchange rate structure, the exchange rates effective as at December 31, 1954, or, in a few surveys, at a later date, are given. For convenience, most of these tables are given in terms of local currency units per U.S. dollar. In the surveys of countries which employ “mixing” systems, the tables include effective “mixing” rates arising from the negotiation of percentages of the total exchange at different rates.

Under Changes during 1954, the more significant changes that have taken place in a country’s restrictive system during 1954 are presented in chronological order. Where it is known that some significant event has taken place since the end of 1954, this is indicated either at the end of the survey or in a footnote against the item affected by the change.

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