Concluding Remarks1. By the Chairman of the Executive Board and Managing Director of the International Monetary Fund

International Monetary Fund. Secretary's Department
Published Date:
November 1960
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Per Jacobsson

The main impression that I have from this meeting of the Governors of the Fund is that the problems which exercise the minds of those concerned with economic and financial affairs have been fully and frankly discussed in our deliberations. Many of the statements have touched upon policies already pursued or in the making; and what has been said in this international forum will influence decisions yet to come.

We have heard statements of Governors in which they have explained the situation in their respective countries; they have told us about the difficulties they are encountering and the progress that has been made; and they have also mentioned a number of problems to which they would like to see some solution. There is no doubt that a great many countries deserve congratulations on their achievements, helpful both to themselves and to the world at large. I was pleased to hear some Governors indicate that the improved monetary position had prepared the way for the formal acceptance by their countries of the obligations of Article VIII. The preparatory technical work has already been completed for a number of these countries, and I believe that we may expect the final decisions to be taken within the next few months. On the other hand, we heard that some countries felt their positions were not sufficiently strong for them to move to Article VIII in the near future; and, in relation to these countries, the Fund will continue to follow the same policies and procedures under Article XIV as in the past.

We must attach great importance to the declarations made by the Governors of certain of the larger countries, from which it can be concluded that there is no intention to alter the existing exchange structure. These declarations confirmed the policies previously announced. Looking back upon the period of postwar adjustments, it is not surprising that exchange rates have been subject from time to time to a certain amount of buffeting; but I think that we can now feel confident that in the new environment of greater price stability—to borrow a phrase from the Governor for the United States—the present exchange structure will continue to gain in strength.

It cannot be expected that the remaining problems of disequilibria will all solve themselves, but the importance of appropriate action when required has been fully acknowledged at this meeting. It has been generally agreed that countries are responsible for taking measures directed toward achieving a suitable balance in their international payments. This, as some Governors have reminded us, is not a matter of achieving balance on the current account alone; what is needed is a substantial current surplus for the industrial countries to enable them to partake in the provision of development capital. At the same time, the capital imports of the less developed countries will enable them to finance deficits on their current account. This is a problem—as the Governor for Germany emphasized—which has to be tackled in the light of general international responsibilities. We all listened with great interest to his statement on this subject, and welcomed his assurance that there is a growing awareness and acceptance of this responsibility in his country.

Many Governors referred to the strains and stresses caused by international movements of funds, but it was felt that the challenge of this problem could be met within the existing international financial system. It was, in fact, the general opinion that there is no lack of international liquidity. For the industrial countries, which finance the bulk of world trade, this is undoubtedly true. But whatever the trend of the reserves in individual countries, it was fully recognized that the Fund’s resources are an important element in the world liquidity situation. For the Fund to perform its function as an adequate source of liquidity, it will of course be necessary to fit its transactions as much as possible into the general system of international settlements. The suggestion made by the Governor for the United Kingdom that a study should be made of the currencies to be drawn from the Fund is of particular interest in this connection. Considerable attention has already been given to this subject, but I would agree with him that it would be useful to examine it afresh in the near future.

This was not the only proposal for the study of particular problems by the Fund. It has been a recurrent theme at recent Annual Meetings that the Fund should examine more fully the problems relating to the prices of primary products. The Governors for Brazil, Greece, Indonesia, Tunisia, and the United Arab Republic, in particular, referred to this problem earlier this week. As far as the actual use of the Fund’s resources is concerned, a study has already been made on the subject of compensatory financing of commodity fluctuations. In conjunction with other international institutions, and independently, we shall continue to study this whole set of problems.

I have the impression that at this meeting I have heard the possibility of deflation referred to more specifically than at previous meetings. It seems to me that the present situation is characterized by greater stability in the level of prices, rather than by any apparent deflationary tendencies. But we may feel assured that, just as the authorities in the individual countries have shown their ability to cope more and more successfully with the problem of inflation, so they surely will not be lacking the instruments or the determination to cope with the opposite problem of deflation, were it really to come upon us at some time in the years ahead. In particular, the efforts can now be better coordinated internationally than was possible in the interwar period. Indeed, I fully agreed with the Governor for Austria when he expressed the opinion that a forum for the exchange of views on monetary and financial developments is now needed more than before, and that the Fund should be further strengthened as a center for monetary cooperation.

Turning to another matter, I can assure the Governor for India that the Fund will continue to devote much attention to different aspects of the question of restrictions, including the problems to which he specially referred. Consideration of trade policies cannot be neglected by the Fund if it is to fulfill one of its main objectives set out in Article I of the Fund Agreement—to facilitate the expansion and balanced growth of world trade. Many Governors—let me mention those for France, Greece, Indonesia, Japan, and the United States, among others—stressed the need to reduce the obstacles to trade, and in this way we have received a clear indication of the importance the Board of Governors attaches to a continued examination by the Fund of these problems.

There were many other points raised in the statements by the Governors on which I should have liked to comment, but it is not possible to do so within the scope of these short closing remarks. I can assure them that their remarks will be carefully studied by us in the coming months so that we can derive maximum benefit from the guidance we have been given.

It remains for me to note the many appreciative remarks made about the Report of the Executive Directors, and to thank the Governors for the very kind words directed to me personally and more generally to the management and staff. I think no one more than Mr. Cochran and myself can bear witness to the hard and conscientious work that has been performed by the staff in the course of this very active year. Provisions have been made in the current budget for an increase in the personnel of the Fund, and this increase is now doubly needed because of the steady growth in the number of member countries, and the more frequent requests received and anticipated for technical assistance and advice.

We shall certainly devote our best efforts to the work of the Fund in the future, as we have sought to do in the past; and I should like to tell you how much we have been encouraged in this task by the confidence expressed in the Fund and the staff at this meeting.

Delivered at the Closing Joint Session, September 30, 1960.

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