Chapter

Article IV: Exchange Arrangements

Author(s):
International Monetary Fund
Published Date:
April 1987
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Surveillance over Exchange Rate Policies: General Implementation—Review

The Executive Board has reviewed the general implementation of the Fund’s surveillance over members’ exchange rate policies, as required by Paragraph VI of Procedures for Surveillance contained in the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63), adopted April 29, 1977, as amended, including the procedures for the conduct of consultations under Article IV, which in principle shall comprehend the regular consultations under Article VIII and Article XIV, and approves the continuation of the procedures as described in SM/88/39, in the light of the Managing Director’s summing up, until the next review, which shall be conducted not later than April 1, 1990.

Decision No. 8858-(88/64)

April 22, 1988

Surveillance over Exchange Rate Policies: Amendment of 1977 Document, and Review

I. Amendment of 1977 Document

The first sentence of Paragraph VI of Procedures for Surveillance contained in the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63), adopted April 29, 1977, as amended, shall be amended to read as follows:

The Executive Board shall review the general implementation of the Fund’s surveillance over members’ exchange rate policies at intervals of two years and at such other times as consideration of it is placed on the agenda of the Executive Board.

Decision No. 8856-(88/64)

April 22, 1988

II. Review

The Executive Board has reviewed the document entitled “Surveillance over Exchange Rate Policies” attached to Decision No. 5392-(77/63), adopted April 29, 1977, as amended, as required by paragraph 2 of that decision. The next review of the document shall be conducted not later than April 1, 1990.

Decision No. 8857-(88/64)

April 22, 1988

The Chairman’s Summing Up at the Conclusion of the Discussion on Article IV Consultation Procedures—Initiation of the Bicyclic Procedure and Changes in Cycles, and Simplified Interim Procedures—Executive Board Meeting 87/100, July 8, 1987

On the occasion of our earlier discussion on June 8, Executive Directors already broadly endorsed the general criteria for the periodicity of Article IV consultations in individual cases. Two issues remained to be addressed.

On the … issue of the involvement of the Executive Board, a number of Directors expressed a preference for Option II in SM/87/139, under which staff reports on the occasion of the simplified interim procedures would be placed on the tentative schedule of Executive Board meetings and, in the absence of a request for a Board discussion, the Article IV consultation would be deemed to have been completed without discussion. A majority of Directors, however, clearly preferred Option III whereby the staff papers on the occasion of the simplified interim procedure would be issued for information only. This is the practice that will be followed for the initial application of the bicyclic consultation procedure. There was no support for Option I.

SM/87/139

II.

a. Under Option I, the staff report would be submitted for consideration by the Executive Board and included in the tentative schedule of the Executive Board for a particular meeting. In the absence of a request by a certain date (to be indicated in the circulating note) from an Executive Director that the report be taken up for discussion in the Executive Board, the interim consultation with the member in question would be deemed to have been completed without discussion by the Executive Board, and the conclusions set forth in the staff appraisal would be deemed to have been adopted by the Executive Board, thereby completing the consultation in accordance with the current Procedures for Surveillance. As in the case of other decisions adopted without discussion, the minutes of the next meeting of the Executive Board would state that the Board has completed the interim consultation and approved the conclusions set forth in the staff appraisal.

Option I could be introduced without any amendment to the existing Procedures for Surveillance.

b. Under Option II, the staff report would be submitted for consideration by the Executive Board and included in the tentative schedule of the Executive Board for a particular meeting as under Option I. In the absence of a request by a certain date from an Executive Director that the report be taken up for discussion in the Executive Board, the interim consultation with the member in question would be deemed to have been completed. In contrast to Option I, the decision of the Executive Board completing the consultation would be a procedural one only and, therefore, the Executive Board would not be deemed to have approved the conclusions contained in the appraisal section of the staff report. It would be recorded in the minutes of the next Executive Board meeting that the interim consultation has been completed.

Option II would require an amendment to paragraph II of the existing Procedures for Surveillance, allowing for an interim consultation with a member to be completed without the Executive Board reaching conclusions (Annex III to SM/87/117).

c. Under Option III, the staff report would cover “consultation discussions” with a member but would be circulated to members of the Executive Board “for information only” and not “for consideration by the Executive Board.” Any Executive Director could request that the staff report be taken up for discussion by the Executive Board.

Option III would not require an amendment to the existing Procedures for Surveillance because the issuance and circulation of a staff report “for information only” could be regarded as an interim staff report of ongoing consultation discussions with the member in question.

III.

In conclusion, only the simplified interim procedures envisaged under Options I and II above would constitute “consultations” under Article IV, Section 3(b). Option III would furnish the Board with information on consultation discussions taking place under the same provision of the Articles. The role of the Executive Board under each option varies accordingly:

a. Under Option I, the Executive Board would adopt, without discussion, a decision approving the conclusions set forth in the staff report;

b. Under Option II, the Executive Board would adopt, without discussion, a decision completing the consideration of a staff report by the Executive Directors. Hence, the Executive Board would take note of the staff report, but would not approve any conclusions set forth in the report;

c. Under Option III, the Executive Board would not adopt any decision.

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