IMF History (1966-1971) Volume 1

Chapter 1: Early Discussions of Liquidity (Before 1963)

International Monetary Fund
Published Date:
February 1996
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Questions About the Adequacy of the world’s supply of reserves had arisen as early as 1953. It was not until after external convertibility of the Western European currencies had been restored toward the end of 1958, however, that international liquidity emerged as an issue in international financial discussions, and monetary experts and officials began to advance proposals for expanding or improving international liquidity.

Studies Before Convertibility

Reserve Adequacy—1953

The Economic and Social Council of the United Nations (Ecosoc) passed a resolution on July 10, 1952 which, inter alia, asked the Fund to keep under continuous review the adequacy of monetary reserves and to furnish an analysis on the subject for the meeting of the Ecosoc in 1953. As a result, the Fund staff prepared a draft report on “The Adequacy of Monetary Reserves” in April 1953. This report was discussed in the Executive Board in May and after revision was sent to the Ecosoc in June, being described as a technical analysis and not a statement of the Fund’s policy.

The report, which was later published, explained that the adequacy of reserves depended on the prospective problems that confronted a country and, therefore, would differ from country to country and from problem to problem.1 From there the report surveyed in detail the complexity of the concept of reserves and the varied factors entering into the determination of their adequacy. It also provided comparisons between the principal monetary reserves data for 1928, 1938, and 1951, and discussed the influences which, in these years, had made a given amount of reserves more (or less) adequate than previously.

Its conclusions consisted of four alternative definitions of adequacy. At the one end, (i), reserves might be considered adequate if they enabled a country in bad years, by recourse to intensified restrictions, to maintain its external debt payments and to purchase the goods and services necessary to avoid hardships to the population or dislocation of its economy. At the other extreme, (iv), reserves might be considered adequate if they permitted a country to maintain currency convertibility even through severe depressions (though not through prolonged periods of international deflation such as occurred in the 1930s) without the need to resort either to restrictions or to domestic deflation. Two intermediate definitions would have linked adequacy to the maintenance of currency convertibility, except in a severe depression, with (ii) and without (iii) the use of restrictions. The report suggested that almost all countries, assuming the adoption of appropriate policies, would have reserves that were adequate under definition (i), many would qualify under definition (ii), some under definition (iii), and a few under definition (iv).

A Second Report on Reserve Adequacy—1958

Following the report made in 1953, the Fund kept in view the possibility that it might have to expand its resources. In 1956 the staff made a fresh study of international liquidity, and reference to a possible need for increases in members’ reserves other than in gold was made in a memorandum sent to the Executive Board in May 1956. In May 1957 South Africa, especially concerned about the position and price of monetary gold, asked that the staff undertake a study of the factors affecting the present state of international liquidity, and during the Annual Meeting in September 1957 several Governors made reference to a possible inadequacy of monetary reserves.

In April 1958 a staff working party, following up on these remarks, pointed out that the Fund might expect to be faced with requests for drawings which might be quite considerable in relation to the Fund’s available resources. The working party saw no reason to anticipate that the Fund would exhaust its liquid resources by the end of 1958, but regarded it as desirable that the adequacy of the Fund’s resources to meet prospective requirements be kept under review.

The outcome of this review was a report entitled International Reserves and Liquidity, published later in 1958.2 This report reflected primarily the views of the Managing Director, Mr. Per Jacobsson, who expressly stated in the foreword that it did not necessarily represent the views of the Executive Directors. The report argued that the adequacy of international liquidity did not depend solely, or even mainly, on the volume of reserves in relation to the volume of world trade. Rather, reserve adequacy depended on a combination of factors: the level and distribution of country reserves, the existence of sufficient facilities for international credit and borrowing, and the soundness of the international financial structure, including the appropriateness of prevailing exchange rates.

The report concluded that, although under certain fairly specific and broad conditions the existing gold and foreign exchange reserves, estimated at $52.9 billion, should not be considered inadequate, circumstances in which greater reserves would be needed could easily be envisaged. The stability of balances of payments was very uncertain, the Fund’s aid had been sought in the sterling crisis of 1956, in the boom of 1957, and in the recession of 1958, and the Fund was likely to be called upon in currency crises in the future. In the light of these circumstances, it was doubtful that the Fund’s resources were sufficient for future action.

This report was instrumental in bringing about, in 1959, the first enlargement of Fund quotas, and a sizable one at that. A general increase in quotas of 50 per cent, together with special increases in the quotas of Canada, the Federal Republic of Germany, Japan, and several other countries, resulted in an expansion of the resources of the Fund by about $6 billion, to more than $14 billion.

Aftermath of Convertibility

The establishment of external convertibility for 14 European currencies at the end of 1958, the subsequent virtual elimination of exchange restrictions, including the gradual relaxation of controls on capital transfers, and the eventual spread of external convertibility to other currencies, including the Japanese yen, added a new dimension to the question of the adequacy of world reserves. A liberal trade and exchange regime and unprecedented levels of world output and prosperity had expanded international trade in goods and services and the flow of investment capital across national boundaries to magnitudes far beyond what anyone had imagined possible a decade before. But it was not only long-term capital investment that rose rapidly. Transfers of short-term capital—previously curtailed by restrictions or by special exchange rates—also began to take place on an increasingly large scale. As exchange restrictions were lifted, greater freedom was given to banks and to private individuals in European countries to hold liquid assets in other countries. Moreover, once the European countries had accepted the obligations of Article VIII of the Fund’s Articles of Agreement in February 1961, governments were seen as being formally committed to complete and lasting convertibility for their currencies. The lifting of restrictions that had taken place did not have to be regarded as temporary. Within a few years’ time short-term capital was being transferred with relative frequency and in massive amounts. Initially, such transfers were made in response to differences in interest rates between various countries. But after the revaluation of the deutsche mark and the Netherlands guilder in March 1961, anticipations of possible changes in par values—and even of changes in political leadership—began to touch off flows of funds of a speculative nature as well.

Short-term capital movements began seriously to disrupt the balance of payments positions of the major industrial nations. Sterling, for example, beginning in the 1960s was subjected from time to time to severe strains in the world’s exchange markets, at least partly because of rather sharp movements of short-term capital, and capital flows in unexpectedly large magnitudes and flights from dollars into gold started to aggravate the balance of payments deficits of the United States also. Short-term capital movements became greater as vast holdings—in the billions—of dollars and of liquid assets denominated in dollars were accumulated by European central banks and by private commercial banks, traders, investors, and other international financiers—the building up of such dollar balances being the way, along with the use of gold reserves, in which the U.S. payments deficits were financed.

At first, in order to finance short-term capital movements, substantial amounts of reserves were utilized and there was extensive recourse to the Fund.3 Financial officials realized, however, that further steps would have to be taken.

At their monthly meeting in March 1961 at the Bank for International Settlements (bis) in Basle, the Governors of the central banks of Belgium, France, the Federal Republic of Germany, Italy, the Netherlands, Sweden, and the United Kingdom agreed to cooperate closely in foreign exchange markets to assist any currency that was in difficulty because of speculation. They would hold each other’s currencies to a greater extent than before, instead of converting them immediately into gold or dollars, and they would provide each other with short-term loans of needed currencies to help finance sudden flights of capital.

After the inauguration of this Basle Agreement, a series of national and international arrangements was gradually worked out in the next several years by which central banks agreed to cooperate with each other. Defenses against speculative runs were strengthened in 1962 with the introduction of “swap” facilities by the United States. These arrangements provided for reciprocal lines of credit, that is, for the exchange of a specified amount of dollars against an equivalent amount of the currency of the other participant, which might be called upon by either party when considered necessary; the swaps were subject to reversal at a future date.

Like the Basle facilities, the swap arrangements were used extensively as soon as they were set up, and within a short time a network of swap arrangements and credit lines was developed. The leading proponent of this form of bilateral cooperation was Mr. Robert V. Roosa, then Under Secretary for Monetary Affairs in the U.S. Treasury, who worked out many of the arrangements. These and similar arrangements were heavily used in the next several years.

Central banks also began to work more closely together to reduce the likelihood that speculative capital movements would take place. For instance, they attempted to coordinate their monetary policies, deliberately influencing their short-term interest rates so as not to induce disturbing capital movements. In order to affect the cost of the forward exchange cover necessary for speculative operations, central banks of industrial countries began to intervene on a large scale in forward exchange markets and to try to coordinate their intervention. For the first time since before World War II the United States, in 1961, entered into exchange transactions for monetary purposes, selling exchange in the forward markets of Europe. Gradually arrangements were made between the European countries and the United States permitting the latter, in cooperation with the European central banks, to operate in spot and forward exchange markets in Europe.

Another evidence of the collaborative efforts of financial authorities to defend the international monetary system was the institution in 1961 of the so-called Gold Pool. As the gold reserves of the United States began to decline, enhancing speculation that the official price of gold, $35 an ounce, would be raised, and as pressure on the Bank of England to intervene in the London gold market to keep the price from rising became intense, an informal arrangement was formed: the central banks of Belgium, France, the Federal Republic of Germany, Italy, the Netherlands, Switzerland, and the United States would share with the Bank of England the burden of intervention in the London gold market to hold the market price of gold at, or close to, the official price.4

The Fund Adapts Its Policies

Two facets of the Fund’s response to the evolving world monetary situation have already been mentioned: a large increase in quotas approved in 1959 and the provision of access to its resources on a scale greater than before. For the time being this was thought to be enough. Nevertheless, international liquidity began to claim an increasing share of the Fund’s attention.

The Fund’s first official pronouncements on the subject came in the Annual Reports for 1960 and 1961 and in the speeches of Governors at the Annual Meetings in those years. The Annual Report for 1960 took an optimistic view of the world liquidity problem. Stressing that international liquidity included not only gold and foreign exchange directly owned by members but also members’ positions in the Fund, the Report noted that the supply of world liquidity had actually expanded. Following the 1959 enlargement of quotas there had been an increase of about $1 billion in the gold holdings of the Fund, and if account was taken of the increase in the Fund’s holdings not only of gold but also of currencies suitable for international settlements, the growth of resources available through the Fund was several times that of the decrease in reserves directly owned by members.

At the 1960 Annual Meeting those Governors who referred to the matter expressed agreement with this view, and in his closing speech Mr. Jacobsson cited a consensus that there was “no lack of international liquidity.”5 This remained the official view of the Fund for some time to come, but it was coupled with an apprehension that the situation might not remain favorable and with emphasis on the important role in world reserves to be played by the resources which the Fund controlled.

The Annual Report for 1961 stressed again the part played in members’ reserves by their drawing rights in the Fund.6 On the assumption that all members were eligible to purchase foreign exchange equivalent to their gold subscriptions plus 100 per cent of their quotas in the Fund, drawing rights in the Fund amounted to $18.1 billion at the end of 1960. Drawing rights calculated in this way were thus almost as large at the end of 1960 as the total of all exchange reserves held by national monetary authorities.

Considerably more attention was paid to the liquidity problem during the 1961 Annual Meeting. Two or three Governors believed that, reinforced by the availability of the Fund’s resources, international liquidity was adequate to meet the world’s needs. Mr. M. W. Holtrop (Netherlands) even concluded that of late, because of balance of payments deficits of the key-currency countries, there had been an oversupply of liquidity that exceeded the desired increment of reserves by the main reserve-holding countries.7 But the more general view was that care would be needed to ensure that no lack of reserves developed.

In 1961 the Executive Directors began an examination of the ways in which access to the Fund’s resources might be increased. Between July 1961 and July 1962 they took three landmark decisions that substantially improved the Fund’s ability to give financial assistance to its members.

(1) A decision taken in July 1961 made clear that members could, in certain circumstances, use the Fund’s resources to meet balance of payments deficits that went beyond the current account and were attributable, in whole or in part, to capital transfers which were not large or sustained. Thus any doubt that the Fund’s resources could, in given circumstances, be used for that purpose was removed.

(2) A decision taken in July 1962 established principles for the selection of currencies to be used in members’ transactions with the Fund, both drawings and repurchases. The decision gave assurance that transactions would take place in a broad range of currencies, and no longer primarily in dollars. It put into application the consequences for the Fund’s transactions of the acceptance of Article VIII obligations by most European countries in February 1961.

(3) On January 5, 1962 a decision was taken by the Executive Directors approving the General Arrangements to Borrow, and by October 24, 1962 enough participants had acceded to the Arrangements to bring them into operation. By these Arrangements, the Fund enlarged by $6 billion the resources to which it had access.8

Proposals for Expanding World Liquidity

Meanwhile a few economists, looking upon the network of swaps and similar arrangements as ad hoc financing of crises, began to advocate what they considered to be more permanent solutions to the increasingly apparent defects of the international monetary system. Most of the proposals involved, in one way or another, new functions for the Fund.

Triffin Plan

Professor Robert Triffin, of Yale University, was undoubtedly the front-runner in advocating broad reforms of the international monetary system. As early as 1959 he proposed that an enlarged and modified International Monetary Fund be assigned the job of providing a new kind of reserve in the required amounts.9

His reasoning was based on the belief that the gold exchange standard as it had developed was basically unsatisfactory. Under that standard, countries held their reserves in the form of gold and a few national currencies, especially dollars and, to some extent, sterling. The production of new gold was insufficient to meet the growing needs for reserves as trade and other international transactions expanded. Reliance on national currencies as supplementary reserves was haphazard and dangerous. It was haphazard because the growth of reserves was tied to the existence of balance of payments deficits in the United States and the United Kingdom and, in effect, to the domestic policies pursued by these two countries. It was dangerous because foreign-held dollar and sterling balances represented short-term indebtedness of the countries whose currencies were being used as reserves, an indebtedness that weakened the net reserve positions of these countries. Even without any further growth of dollar and sterling balances, the stability of the international monetary system was already jeopardized by the risk of runs on currencies and of flights into gold.

What the world needed, Mr. Triffin argued, was a kind of international reserve which could be augmented appropriately in accordance with international liquidity requirements. The Triffin Plan was in effect two-pronged: it provided not only for an expansion of international reserves but also for a stable structure of reserves. Fund members should agree not to keep any of their official reserves in the national currencies of other countries but to keep all of their reserves in the form of deposits in an extended version of the Fund. Members would thus hold reserves in only two forms, gold and deposits in the Fund. The latter would be used along with gold in international settlements. They might be considered as good as gold, or even better, since they would not only carry a guarantee against exchange rate depreciation but would also earn interest.

In order that the total amount of international liquidity should grow, Mr. Triffin further proposed that the Fund be empowered to create new deposits. Such deposits would arise when the Fund, as appropriately altered, made loans to its members that were analogous to drawings from the Fund but were divorced from Fund quotas, and when the Fund made investments in short-term or long-term government securities of its members. To keep liquidity from becoming excessive, the lending capacity of the Fund would be limited.

In effect, Mr. Triffin proposed to give the Fund the power to create a new kind of money—an international money—and to add to the quantity of this money in accordance with international liquidity requirements as determined by its members. The Fund would be an international central bank for central banks, with the responsibility and the authority to do for central banks internationally what central banks already did for commercial banks nationally. Thus a system would be created that could be rationally managed to stabilize the structure of international reserves and to expand reserves in accordance with need.

In many respects, Mr. Triffin’s proposal was similar to the Keynes Plan of 1942–43.10 That Plan had provided that the monetary reserves of central banks consist of only gold and bancor, an international currency unit made up of deposits with the Clearing Union, and had provided for the creation of new bancor credit deposits. Under the Keynes Plan, central banks were to be allowed, when necessary, to overdraw their accounts with the Clearing Union.

Stamp Plan

The Honorable Arthur Maxwell Stamp, of the United Kingdom, also came up with ideas in 1960 which he modified in 1962 and which ultimately became known as the Stamp Plan.11 His plan provided a mechanism whereby the needs of the industrial countries for additional liquidity, together with the needs of the developing countries for additional foreign capital, could be met simultaneously. According to the 1962 version of his plan, the Fund would create a new form of credit by issuing certificates, denominated in U.S. dollars at a par value based on gold at $35 an ounce, which would be convertible into currencies held by the Fund. Member countries would agree to receive these certificates from central banks or from monetary authorities in settlement of international obligations, up to a total amount equal to their quotas in the Fund. They would hold these certificates as reserves and would undertake to use them in payment only if they were under balance of payments pressure and not for the purpose of adding to their gold or dollar reserves.

The Fund would lend the certificates to the International Development Association (ida), an affiliate of the World Bank, for 50 years. The ida, in turn, would allocate them to the developing countries under an agreed program. The country receiving the certificates would use them to buy capital goods in the industrial countries by tendering them to the central bank of the industrial country concerned and acquiring the necessary national currency. The returns which the ida received on its investments would be paid to the Fund as interest on the certificates. This interest would be credited, as far as practicable, to the members of the Fund that held certificates, in proportion to their holdings.

Other Proposals

In the early 1960s several economists made a number of other suggestions as to how the supply of international liquidity might be enlarged. Most of these proposals were not as far-reaching as the Triffin and Stamp Plans: pointedly, they did not call for the centralization of reserves in the Fund or for the expansion of reserves through the Fund.

Professor A. C. L. Day, of the London School of Economics, proposed that the Fund be transformed into an international central bank, with its own unit of account, free to accept deposit liabilities or extend overdraft facilities to the central banks of member countries.12 Unlike Mr. Triffin, Mr. Day would not have required central banks to hold stated proportions of their reserves in the form of deposits with the Fund. The Day Plan was submitted to, and endorsed by, the Radcliffe Committee.13

Other plans, such as those of Mr. Edward M. Bernstein, of the United States, formerly Director of the Fund’s Research and Statistics Department, did not involve such drastic changes in the functions of the Fund or in the nature of the official reserves that countries held.14 Some of these plans would simply have enlarged the number of currencies used as reserve currencies. Central banks would hold various European currencies, such as deutsche mark, French francs, or Swiss francs, in their reserves in addition to dollars and sterling. The gold exchange standard would thus be given a broader base through a system of “multiple reserve currencies.” Some suggestions for such a multiple-currency approach included the idea that some major industrial countries would coordinate their monetary policies so as to reduce capital movements.

Additional suggestions involved the extension of mutual assistance among central banks. Many ideas were forthcoming as to how central banks could extend short-term credit to one another, by ad hoc agreements or stand-by arrangements. Some proposals involved the Fund’s acting as intermediary between the lending and the borrowing central bank.15

While these proposals for ways to enhance world liquidity were being made, some economists had begun to advocate radically different methods for dealing with the problem of possible deficiencies of liquidity in the monetary system. Several, such as Sir Roy Harrod, of Oxford University, Jacques Rueff, of France, and Michael Heilperin, Professor, Graduate Institute of International Studies, Geneva, urged that the price of gold be sharply increased—possibly doubled (from $35 an ounce to $70 an ounce) or even tripled. Such a change in the price of gold would swell the supply of liquidity by upvaluing both the existing gold stocks held as monetary reserves and the annual additions to these stocks. Hence, they argued, there would be no need to do anything further. Others, most notably Professor Milton Friedman, of the University of Chicago, proposed the introduction of freely flexible exchange rates. Rates which equated demand and supply for exchange, they contended, would do away with any need to expand world liquidity. Central banks would be relieved of any function in the international payments system and would not need to hold reserves for the purpose of making foreign payments.

The Fund’s Reactions to Proposals

We have already noted that the Fund’s primary preoccupation in respect of international liquidity at the beginning of the 1960s was with devising new techniques and policies so that the resources under its control could be used more effectively and enlarged. It was at this time—from February 1961 to January 1962—that the General Arrangements to Borrow were worked out. These Arrangements came about as a result of proposals, initiated by Mr. Jacobsson and some Governors, for the Fund to borrow from the central banks in the countries receiving capital inflows and to make the borrowed funds available to the central banks suffering from capital outflows.16

Suggestions for raising the price of gold or for abandoning the par value system were not taken seriously by the authorities responsible for making monetary decisions, including those in the Fund. The proposals for enlarging the supply of world liquidity, especially the more radical Triffin and Stamp Plans, were also received with coolness. Mr. Jacobsson clearly did not share the fears of those who foresaw a scramble for international reserves, nor did he concur with the predictions made by Mr. Triffin that the catastrophic collapse of the international monetary system of the 1930s was bound to be repeated.

Mr. Jacobsson’s view, as expressed in his speeches and articles, was that the gold exchange standard had performed well the two functions required of an international monetary system: it had kept exchange rates stable and it had provided sufficient liquidity.17 He believed that the problem of a shortage of international liquidity was not yet so acute as to require concerted action by monetary authorities. If the problem arose, monetary authorities could agree on solutions. His beliefs along these lines were reinforced by the 1959 increase in Fund quotas and the completion of the General Arrangements to Borrow in 1961–62.

Mr. Oscar L. Altman, then Advisor in the Research and Statistics Department, also set forth his personal views to the effect that Mr. Triffin had overstated the risks of instability in the structure of international reserves and had understated the ability of the key-currency countries to meet the risks to which they were exposed.18 Mr. Altman, too, pointed to the much larger resources of the Fund following the 1959 increase in quotas and to the wider assortment of convertible currencies that had become available, and thought that the Fund was quite able to help countries in deficit.

Moreover, Mr. Altman argued, the volume of reserves and the volume of trade were not mechanically related. The demand for reserves was rather the result of the policy decisions of a relatively small number of countries. Furthermore, the adequacy of the reserve position of any country was influenced not only by its gross reserves but also by its debtor or creditor position in the Fund, the size of its unused drawing rights in the Fund, the amount of its outstanding and overdue short-term commercial debt, official short-term borrowings, gold pledges, banks’ holdings and other private holdings of exchange, and the like. Accordingly, should the need to expand liquidity arise, the existing international financial machinery was the best means for doing so. Nothing so drastic as the Triffin Plan was necessary. Indeed, an expanded Fund as envisaged in Mr. Triffin’s proposals would be faced with a host of new problems, unduly complicating its actions and policies.

New Studies of Liquidity

Nonetheless, the questions raised were very important and the staff of the Fund began to explore in greater depth than previously how a scarcity of liquidity might manifest itself and what methods were available for influencing and controlling the amount and the distribution of liquidity.19 By what criteria could one judge the need for liquidity in the international monetary system? If the value of world trade was a relevant but not a sufficient consideration, what other factors had to be taken into account? Once it had been determined what the optimal level of liquidity was, what kind of international arrangements could best supply additional liquidity?

At this time the concepts of conditional and unconditional liquidity were refined and the distinction between them made clear. Conditional liquidity was defined as potential access to reserves, such as the resources of the Fund, subject to the observance of certain conditions as to the use to be made of them or as to the general economic policies to be pursued by the recipient. Unconditional liquidity, as the term implies, was defined as access to resources without any conditions being attached. These terms were later to be used with increasing frequency.

Zolotas and Maudling Plans

That the problem of liquidity was beginning to attract greater official attention was evidenced by new proposals made by Governors during the 1962 Annual Meeting. In general, the Governors who spoke about liquidity commended the various measures taken by central banks and by the Fund to deal with the problems created by capital movements; with these measures, they believed that the level of world liquidity was adequate. Nonetheless, two Governors advanced proposals to ensure that, in the future, as world trade continued to expand, the volume of liquidity could be appropriately enlarged.

Mr. Xenophon Zolotas (Greece) proposed a multiple-currency gold exchange standard, the main features of which would be (1) the reciprocal accumulation by major trading countries of reserve balances in each other’s currencies, (2) a gold guarantee by the major countries on foreign official reserve deposits, and (3) preferential interest rate and tax treatment for foreign official depositors of reserve balances, which could possibly be extended to foreign private holders of short-term assets.20

Reflecting the importance attached in the United Kingdom to some new arrangement for providing liquidity, Mr. Reginald Maudling (United Kingdom) proposed a scheme that had been worked out in the Bank of England, labeled the “mutual currency account.” Building on the cooperation that central banks had already initiated by holding each other’s currencies, Mr. Maudling’s plan was to widen the system still further. He described his plan as follows: “By this I have in mind an arrangement of a multilateral character under which countries could continue to acquire the currency of another country which was temporarily surplus in the markets and use it to establish claims on a mutual currency account which they could themselves use when their situations were reversed. Such claims on the account would attract the guarantee that attaches to holdings in the Fund.”21

In his concluding remarks at the 1962 Annual Meeting Mr. Jacobsson took note of these suggestions, promising that they would be studied carefully.

See History, 1945–65, Vol. I, pp. 334–35. The report was published in Staff Papers, Vol. III (1953–54), pp. 181–227, and in History, 1945–65, Vol. III, pp. 311–48.

See History, 1945–65, Vol. I, pp. 447–48, and Vol. III, pp. 349–420.

See History, 1945–65, Vol. I, pp. 486–87.

For further details on inter-central-bank cooperation and on the institution of the Gold Pool, see History, 1945–65, Vol. I, pp. 482–85.

Concluding Remarks by the Managing Director, Summary Proceedings of the Fifteenth Annual Meeting of the Board of Governors, 1960 (Washington, 1960). (Hereinafter cited as Summary Proceedings, 19—.)

Annual Report of the Executive Directors for the Fiscal Year Ended April 30, 1961 (Washington, 1961), p. 114. (Hereinafter cited as Annual Report, 19—.)

Statement by the Governor of the Fund for the Netherlands, Summary Proceedings, 1961, pp. 113–14.

More information on these decisions, and the circumstances leading up to them, can be found in History, 1945–65, Vol. I, pp. 502–20.

Mr. Triffin’s views were put forward initially in 1959 in two articles, “The Return to Convertibility: 1926–1931 and 1958— ? or, Convertibility and the Morning After,” Banca Nazionale del Lavoro, Quarterly Review, March 1959, pp. 3–57, and “Tomorrow’s Convertibility: Aims and Means of International Monetary Policy,” Banca Nazionale del Lavoro, Quarterly Review, June 1959, pp. 131–200. Further development of his views can be found in “Statement,” in Employment, Growth and Price Levels, U.S. Congress, Joint Economic Committee (Hearings), 86th Cong., 1st sess., October 26–30, 1959 (Washington, 1959), Part 9A, pp. 2905–54. A detailed exposition of his proposals was set forth in his Gold and the Dollar Crisis: The Future of Convertibility (New Haven, 1960).

Proposals for an International Currency (or Clearing) Union; see History, 1945–65, Vol. III, pp. 3–36.

Maxwell Stamp, “The Fund and the Future” Lloyds Bank Review, October 1958, pp. 1–20, “Changes in the World’s Payments System,” Moorgate and Wall Street, Spring 1961, pp. 3–22, and “The Stamp Plan—1962 Version,” Moorgate and Wall Street, Autumn 1962, pp. 5–17.

A. C. L. Day, “Memorandum of Evidence,” in Principal Memoranda of Evidence, [Radcliffe] Committee on the Working of the Monetary System, Vol. 3 (London, 1960), p. 75. See also his “The World’s Payments System,” in International Payments Imbalances and Need for Strengthening International Financial Arrangements, U.S. Congress, Joint Economic Committee (Hearings Before the Subcommittee on International Exchange and Payments), 87th Cong., 1st sess., May 16–June 21, 1961 (Washington, 1961), pp. 325–30.

[Radcliffe] Committee on the Working of the Monetary System, Report (London, Cmnd. 827, 1959), pp. 241 and 247–48.

See, for example, “International Effects of U.S. Economic Policy,” in Employment, Growth and Price Levels, U.S. Congress, Joint Economic Committee (Study Paper No. 16), 86th Cong., 2nd sess. (Washington, 1960), pp. 85–86, “The Adequacy of United States Gold Reserves,” American Economic Review (Papers and Proceedings of the Seventy-Third Annual Meeting of the American Economic Association), Vol. 51 (1961), pp. 439–46, and “Statement: The Problem of International Monetary Reserves,” in International Payments Imbalances and Need for Strengthening International Financial Arrangements, U.S. Congress, Joint Economic Committee (Hearings Before the Subcommittee on International Exchange and Payments), 87th Cong., 1st sess., May 16–June 21, 1961 (Washington, 1961), pp. 107–37. Mr. Bernstein had advanced these ideas as early as October 1958 at a seminar in international economics at Harvard University.

Many of these proposals have been brought together in one volume in World Monetary Reform: Plans and Issues, Herbert G. Grubel, ed. (Stanford, 1963). Also, a comparison of the various proposals coming forward at this time can be found in Fritz Machlup, Plans for Reform of the International Monetary System, Special Papers in International Economics, No. 3, Princeton University (Princeton, 1962).

Mr. Jacobsson first made public his proposals in April 1961; see “Fund Report at Ecosoc,” International Financial News Survey, Vol. 13 (1961), pp. 121–27. He also publicized them at the 1961 Annual Meeting; see both Opening Address and Concluding Remarks by the Managing Director, Summary Proceedings, 1961, pp. 28–29 and 157–58. For a detailed description of how the General Arrangements to Borrow came into being, see History, 1945–65, Vol. I, pp. 507–16.

See, for example, his Opening Address to the 1962 Annual Meeting, Summary Proceedings, 1962, pp. 26ff, and his “The Two Functions of an International Monetary Standard: Stability and Liquidity,” in World Monetary Reform: Plans and Issues, Herbert G. Grubel, ed. (Stanford, 1963), pp. 227–37.

Oscar L. Altman, “Professor Triffin on International Liquidity and the Role of the Fund,” and Robert Triffin, “A Brief for the Defense,” Staff Papers, Vol. 8 (1960–61), pp. 151–91 and 192–94. Also, Robert Triffin, “Altman on Triffin: A Rebuttal,” Banca Nazionale del Lavoro, Quarterly Review, March 1961, pp. 31–50.

See, for example, J. Marcus Fleming, “International Liquidity: Ends and Means,” Staff Papers, Vol. 8 (1960–61), pp. 439–63. Mr. Fleming’s article appeared in the same volume of Staff Papers as Mr. Altman’s article cited in the preceding footnote. Monetary experts could thus see that different approaches to the problem of liquidity were being studied by the Fund staff.

Statement by the Governor of the Fund for Greece, Summary Proceedings, 1962, pp. 111–12.

Statement by the Governor of the Fund and the World Bank for the United Kingdom, Summary Proceedings, 1962, pp. 67–68.

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