Purpose of the Provision

International Monetary Fund
Published Date:
January 1971
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It might be helpful to begin the discussion of Article IV, Section 8, by recalling what was said of its purpose in the course of the Bretton Woods Conference. The Second Report of Committee 2 on Operations of the Fund to Commission I declared that:

This Section states that the Fund may have neither losses nor profits out of its holding foreign currencies, in case of change in the value of the currency. This principle is usually referred to as a “gold clause.”2

However, there is implicit in this statement a more sophisticated principle. It is that the provision is intended to enable the Fund to continue to conduct its operations in the manner envisaged by the Articles and in accordance with the purposes of the Articles notwithstanding changes in the gold or foreign exchange value of members’ currencies. The impact of this principle will become apparent in relation to certain special problems which will be discussed later in this pamphlet.

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