International Monetary Fund
Published Date:
January 1979
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A number of major simplifications that would follow from putting the Fund’s conditional credit activities on an SDR basis have already been mentioned. The split of the Fund into two Departments would disappear. Instead of two systems for the selection of creditor countries, a single system would suffice. Most of the esoteric characteristics of the Fund would vanish and this would make it much simpler to understand. Thus, there would no longer be a need for concepts such as the “reserve tranche,” 30 the “norm,” “reserve position in the Fund,” “remuneration,” or the “operational budget.” Although special facilities could continue to float in the sense that their use would not be taken into account in determining a member’s access to use of the credit tranches, there would be no need and no room for special facilities “floating with respect to the reserve tranche,” and this would do away with the complications for charges that arise from this concept. The anachronistic provisions in Article VII dealing with “scarcity of currencies” (Sections 2 to 5), which survived the Second Amendment, would have to go and would not be missed; 31 one would hope that some more effective provisions to put pressure on creditors could be substituted. Other provisions that would no longer be needed would include those on Payments when quotas are changed (Article III, Section 3); Substitution of securities for currency (Article III, Section 4); Maintenance of value (Article V, Section 11); and there would also be many minor simplifications throughout the Articles.

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