IMF History (1966-1971) Volume 1

Chapter 6: SDRs Take Shape (April 16–September 30, 1967)

International Monetary Fund
Published Date:
February 1996
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Once the EEC Countries had Decided that new arrangements for the creation of liquidity in the Fund might be established if a number of changes were made in the Fund’s policies governing its regular resources and if a sufficiently large majority of the voting power in the Board of Governors was required for actual reserve creation, a compromise began to emerge. Many more meetings were held and tentative outlines drafted, however, before the precise characteristics of the new arrangements were determined. Preferences for certain features of these arrangements gradually became clear; the arrangements should be based on new automatic drawing rights rather than on reserve units; a facility should be set up with resources separate from the Fund’s traditional drawing rights; and no backing in the sense of a pool of currencies would be needed if the obligations of participants in the facility to accept the new drawing rights were specified. New tentative outlines were drafted in the Fund. Yet many questions remained unanswered, in particular the question of the size of the voting majority to be required for approval of the actual creation of new drawing rights and the question of the rules that would apply to reconstitution of the drawing rights after participants had received and used them. At one meeting in July and another in August of 1967, the Finance Ministers and Central Bank Governors of the countries of the Group of Ten provided the answers. The Executive Directors then worked out and approved for submission to the Board of Governors a final Outline, and this was adopted by the Board of Governors at their Annual Meeting in Rio de Janeiro in September.

Among the factors that helped to foster agreement on a final Outline was the growing concern about developments in world reserves.1 These developments were, at least in part, responsible for the heightened eagerness of the U.S. authorities for a liquidity plan. The Fund, too, regarded the changes taking place in the level and composition of world reserves as indicative both of the need for a plan to supplement world reserves and of the form that a new reserve might take. The Fund, therefore, devoted an entire chapter to the subject of reserves in the Annual Report for 1967.2 A brief recounting of what was occurring with respect to reserves is thus important background to the discussions described later in this chapter.

Developments in World Reserves

We have already noted in Chapter 4 that the rate of growth of world reserves slowed down in both 1965 and 1966. In the 12 months to the end of March 1967 the reserves of the industrial countries, taken as a group, actually declined. During the next 12 months, ended March 1968, this decline was to extend to the total of world reserves. Moreover, not only were there actual declines in world reserves, but there were also significant changes in their composition. Gold continued to be the largest component, constituting $40.9 billion, or about 57 per cent of the total of $71.5 billion at the end of 1966. But for many years this percentage had been falling, mainly because of the reduced weight in total world reserves of the United States, which held a particularly high proportion of its reserves in gold. Furthermore, additions to the supply of gold held by national monetary authorities were becoming smaller. Between 1948 and 1964 the gold added to official monetary reserves had averaged annually about 1.4 per cent of existing gold reserves. After 1964 these additions ceased, and by December 1966 the gold holdings of national monetary authorities were no higher than they had been two years before.

In 1966, for the first time since just after World War I, gold actually started to flow out of some official stocks. Private demand for gold for hoarding, manufacture of jewelry, and industrial use was very much on the increase and, indeed, in anticipation of a price rise, hoarding of gold was to become intense late in 1967 and early in 1968.3 By the end of March 1968 the gold holdings of national monetary authorities, at $37.8 billion, were lower than at any time in more than a decade.

Foreign exchange holdings at the end of 1966, at $24.3 billion, made up 34 per cent of world reserves. But in the three years 1964–66, allowing for the effect of special financing transactions, growth in this component of reserves had also shown signs of coming to a halt. From the late 1930s until about the end of 1964, foreign exchange had constituted the most rapidly growing form of world reserves in absolute amounts, and usually in percentage terms as well. After the end of World War II virtually the whole increase had been in the form of liquid claims on the United States. In 1951 holdings of dollars in official reserves, at $4.2 billion, had still been only about half the size of official holdings of sterling. Throughout the postwar period, sterling holdings had remained roughly stable, while official dollar holdings had increased steadily. By 1962, therefore, official dollar holdings were about twice as large as official sterling holdings. Official reserves held in other currencies, mostly French francs, were much smaller.

After 1964 official holdings of foreign exchange had been dominated by special influences and had moved rather erratically, partly in connection with drawings on credits from central banks; these transactions had somewhat blurred the distinction between the different currency components of foreign exchange reserves and involved large shifts in foreign exchange holdings between countries. On balance, in 1965 and 1966 there had been a substantially slower accumulation of foreign exchange reserves than in prior periods.

In contrast to the declines in reserves held in the traditional forms of gold and foreign exchange, reserve positions in the Fund had risen by exceptional amounts. Following the quota increases agreed in 1965, some 70 per cent of the growth in total world reserves in the two years 1965–66 had been accounted for by positions in the Fund; reserves in this form had risen by $2.2 billion, to $6.3 billion.

To the Fund, these developments suggested that members were making important changes in their reserve policies. Countries that were reserve centers had become eager to avoid weakening their liquidity positions. Faced with payments deficits, the United Kingdom and the United States preferred to obtain credit, either through swap facilities or from the Fund, and to incur repayment obligations, rather than to draw down their gold and exchange reserves or further enlarge their liquid liabilities.

A noteworthy decrease in official gold movements was also evidence that the role of gold in the international monetary system was changing. Reserve centers needing to finance reserve losses and payments deficits were making settlements insofar as possible in forms other than gold. A number of large countries with payments surpluses had received gold for only a very small part of their monetary surpluses and for a still smaller part of their basic payments surpluses. The degree to which members financed deficits and surpluses in forms other than gold bore little relation to the average ratios of gold in their reserves. This suggested some lessening of the influence of traditional reserve policies on the composition of members’ reserves. In effect, in the interest of joint responsibility for the working of the international monetary system, countries seemed to have imposed upon themselves some restraint in the accumulation of gold reserves.

These movements in reserves and shifts in policies influenced the thinking of monetary officials in 1967 both about the need for new reserves and about the type of new reserve that would be acceptable. It seemed probable that, in the absence of international action, not much further increase in the stock of world reserves could be expected. Although there might be some disagreement among officials as to the seriousness of such a situation in the short run, it was hard to conceive that, in the long run, a constant reserve supply could meet the needs of a rapidly expanding world economy. Moreover, data showing that reserves in the form of positions in the Fund were growing very fast helped to demonstrate the point, made repeatedly in the Annual Reports, in the speeches of the Managing Director, and by his representatives at international discussions, that reserve positions in the Fund were genuine reserves.

Third Joint Meeting

The Need for Reserves

These developments, however, did not by any means produce ready agreement that a reserve plan was urgent. French monetary officials continued to be concerned lest any contingency plan agreed upon should be activated forthwith. The external position of the United Kingdom had deteriorated in 1966, amid circumstances that worsened in 1967 and were to culminate in a devaluation of the pound by the end of the year.4 Similarly, by the end of 1966 the U.S. balance of payments had again deteriorated and was in a precarious position. Although the capital balance had improved, military expenditures associated with the hostilities in Viet-Nam had accelerated and imports were increasing rapidly. The current account surplus had thus fallen to its lowest level since 1960.

Consequently, while the main focus of the third joint meeting of Executive Directors and Deputies of the Group of Ten, which was held in Washington on April 24–26, 1967, was to be the two illustrative schemes for reserve creation that had been prepared in the Fund, the French Deputies wanted to discuss again how the actual need for reserve creation was to be determined.5 The U.S. Deputies had circulated a paper (dated April 13, 1967 and entitled “The Need for Reserves”) that contained a number of suggestions for measuring the global need for reserves. But Mr. Pérouse did not regard any quantification as appropriate, and doubted the validity even of qualitative criteria. Instead, he reiterated, it was essential for countries that had been in chronic deficit to restore equilibrium to their balances of payments. Several Executive Directors—Mr. González del Valle, Mr. Diz, Mr. Handfield-Jones, and Mr. J. O. Stone (Australia)—found the U.S. techniques helpful, explaining that some quantitative determination of the need for reserves was going to be necessary to supplement qualitative criteria. Mr. Madan stated that he deduced from their previous reports that both the Deputies and the Executive Directors could recognize the symptoms of economic disorder that would be the prelude to decisions to create reserves: trends toward restrictions on international trade and payments; recourse to domestic policies that were inimical to growth and employment; excessive amounts of speculative capital movements. The difficulties of assessing these symptoms should not be exaggerated. As for the improvement of the adjustment process, in Mr. Madan’s view, this was a long-term structural matter that encompassed more than the management of its balance of payments by a single country. National economic policies might have to be coordinated, and countries with payments surpluses, as well as those with deficits, might have to take measures to smooth the necessary readjustments.

The Managing Director recommended that not too much time be devoted to considering the precise urgency of the need for reserves; it was better, he said, to determine the general criteria for reserve creation that were to be written into the contingency plan. Following Mr. Schweitzer’s intervention, the two illustrative schemes that had been prepared in the Fund were taken up.6

Features of a Plan

Instead of considering one illustrative scheme at a time, the Executive Directors and the Deputies discussed the elements common to both schemes:

  • (1) the rules that would apply to the creation and distribution of any new reserve, whether a drawing right or a reserve unit;

  • (2) the provisions that would govern the use and transfer of either drawing rights or reserve units;

  • (3) the financial resources that would “back” either scheme including, in the case of the drawing rights scheme, the question whether the resources would be merged with other resources of the Fund or would be separate;

  • (4) what kind of reconstitution or repayment process, if any, ought to be instituted; and

  • (5) what decision-making process ought to be written into the plan.

No consensus was reached on any of these points. Although some progress was made regarding the transfer and use of any new reserve, differences persisted on many of the most important elements of any scheme, including the form of any new reserve. Some Deputies and Executive Directors, those, for example, from Canada, the United Kingdom, and the United States, remained very much in favor of reserve units; others, mainly from the eec countries, would agree only to drawing rights.

In all the main areas, agreement remained elusive. Specifically the issues that were still undecided were (1) the entry into force of any scheme and the way decisions would be taken, especially decisions to activate the scheme, that is, actually to create new reserves; (2) the use, transfer, and acceptability of the new reserves, including how they could be used, how they could be transferred—either directly or indirectly—and with what obligations to accept and to hold them; (3) the nature of the resources backing these schemes and, in the case of the drawing rights scheme, whether the resources would be merged with other resources of the Fund or whether they would be segregated; and (4) whether there would be any reconstitution or repurchase provisions linked with the prolonged or extensive use of these assets.

All of these areas involved the basic characteristics of any new drawing rights or reserve units. Among the Deputies, Mr. Deming and Mr. Sven F. Joge (Sweden) went so far during the meeting as to wonder whether efforts to design a truly evolutionary contingency plan should be temporarily abandoned.

On the other hand, as the Executive Directors observed in an informal session two weeks later, there had been some worthwhile achievements at the meeting. The role of the Fund in whatever arrangement was agreed was no longer in doubt. The need for some supplement to reserves of an unconditional type in the international monetary system was generally acknowledged—the term reserve asset now being used fairly generally in the discussions to refer either to reserve units or to drawing rights. And the principle of universality—that all members of the Fund would participate in whatever distribution of reserve assets was made—had been accepted.

Decision to Draft a Tentative Outline

To facilitate agreement on the issues still outstanding after the third joint meeting, the Fund staff prepared technical papers on particular topics: the use and transfer of reserve assets, the choice between merged and separate resources in the Fund for a new reserve facility, and illustrative examples of voting provisions in reserve asset schemes.

Simultaneously, the U.S. authorities, in an effort to pull together the results agreed upon so far, submitted two papers to the Group of Ten: “Outline of a Drawing Unit Reserve Asset (Dura) Plan” and “Revision of the Fund Illustrative Reserve Unit Scheme.” The first of these papers advocated that there be established a new instrument, called a “drawing unit reserve asset.” This term yielded the acronym dura, something like the bancor and unitas that had been advocated more than twenty years before by the Fund’s founders.7 As an offset to the eec proposal that an 85 per cent voting majority plus the agreement of most creditor countries be required to activate any plan or subsequently to create reserves under that plan, the United States put forward what was called the “band” proposal, that is, a voting majority of between 75 per cent and 90 per cent would be required, the lower percentage applying to the smallest amounts of reserve creation and the higher percentage to the largest amounts.

Late in May 1967, several Executive Directors, fearing that the Group of Ten might go on indefinitely considering and reconsidering alternative features of a plan and aware that the Deputies were not resolving their differences very quickly, suggested that the staff draft an outline of a scheme for the fourth joint meeting. Such an outline would not be rigid on any matters on which the discussions of the Deputies of the Group of Ten revealed that country delegations continued to hold contrasting positions. Alternative formulations of certain provisions would be necessary, and some blanks would be left to be filled in later. An outline of this type, although incomplete, would nonetheless give the officials concerned a document that would highlight the points on which they could agree and those on which they differed. Delegations to the fourth joint meeting could indicate what changes they wanted and an amended version could then be presented to the Board of Governors at the Annual Meeting in Rio de Janeiro in September.

Although a few Executive Directors, notably Mr. Larre, preferred that an exhaustive and substantive discussion of the vital questions still to be resolved precede attempts by the staff to draft such an outline, it was agreed that the staff should go ahead.

Convergence of Drawing Rights and Reserve Units

At the end of May 1967, Mr. Schweitzer wrote to Mr. Emminger informing him of the decision to draft an outline and enclosed a copy of the outline that was then being circulated to the Executive Board: “An Outline of a Reserve Facility Based on Drawing Rights in the Fund,” dated May 29, 1967. Since this outline described only a facility based on drawing rights, a companion paper describing a facility based on reserve units was circulated about a week later: “An Outline of a Reserve Facility Based on Reserve Units and Administered by a Fund Affiliate,” dated June 8, 1967. After the tentative outline on drawing rights was discussed in informal session by the Executive Directors, a revised version was issued, also dated June 8.8 The two schemes outlined were simpler than the illustrative schemes drawn up in February 1967 in that they contained only brief references to subjects not yet fully discussed and left blanks for the figures for the voting majority needed for the decision-making process.

The tentative outlines of June 8, 1967 were very like each other, in contrast to the two plans that had been drawn up in February 1967. These had had features in common but had still attempted to present the Deputies with two distinct alternatives.

One of the reasons why the outlines of June 1967 were virtually identical was that when discussion began to center on the characteristics of the schemes rather than on one scheme versus another, many officials realized that the crux of any scheme was the characteristics attached to the reserve asset rather than the name given to it. Once these characteristics were determined, it would be immaterial whether the resulting bundle was called a drawing right or a reserve unit. This realization—that either drawing rights or reserve units could serve equally well—meant that reconciliation among the disagreeing parties might be made possible by compromise on what the asset was called. The staff, in preparing the tentative outline on drawing rights and in revising it, in effect transferred to the drawing rights plan many of the features that had been formerly associated only with reserve unit plans.

No Backing Needed

Another idea that was gradually receding was that backing was necessary for any reserve that was created, except in the event of withdrawal of a participant or liquidation of the scheme. It had become evident that the essential value of the new reserve asset derived from the obligation of participants to accept it, in much the same way as the value of domestic fiduciary money derives its value from its status as legal tender. The resources of the new scheme, therefore, did not have to consist either of a pool of currencies or of lines of credit. They could consist of the obligation on the part of the participants in the scheme to accept drawing rights, or reserve units, from other participants in exchange for an equal amount of convertible currency. The drawing country would thus acquire currencies not out of resources held by the Fund but in the form of convertible currency to be delivered by the participants drawn upon, either directly or indirectly through the intermediacy of the Fund.

This development in thinking is reflected in the plans that the Fund evolved over time. In February 1967, in drafting the “Outline of an Illustrative Reserve Unit Scheme,” the staff had questioned the earlier supposition of Plan I of the Managing Director’s proposals of March 1966 that a member would deposit with the supervising agency currency equivalent to the new units, and had pointed out that this deposit would serve no purpose except when a participant withdrew from the plan or it was liquidated. Therefore, if the plan made appropriate provision for these events, it could dispense with the deposit of currency. It had been further realized that, on these occasions, the reserve asset represented obligations of the issuer of the asset and these obligations could be fulfilled in ways other than the deposit of currencies by participants with the issuer.

The reserve unit scheme of February 1967 had contained details on how to settle accounts with a participant who withdrew from the scheme, as well as for liquidation of the scheme. The tentative outlines of June 1967 likewise did not provide for backing for the new reserve asset in the sense of a pool of currencies. Emphasis shifted to making precise the obligation of participants to accept the new assets. Some illustrative obligations were written into both the February 1967 schemes and the tentative outlines of June 1967.

Separate Resources in Any Event

Both of the tentative outlines of June 1967 provided for a separation of the new reserve assets from the Fund’s traditional operations. The reserve drawing rights plan would have established a separate Reserve Drawing Account in the Fund, and the regular resources of the Fund were referred to as the General Account; any member of the Fund could become a “participant” in the Reserve Drawing Account. The reserve unit plan provided for an International Reserve Organization, this time referred to as an International Reserve Union (iru), as an affiliate of the Fund in which membership would be open to all of the Fund’s members.

In the paper on the choice between merged and separate resources, the staff concluded that merging the new facilities with the regular facilities of the Fund would not necessarily achieve much economy in the resources required. Furthermore, pooling the resources for the two facilities would deprive members of their right to decide the extent to which they would actually commit themselves to finance either of the two kinds of Fund facility, particularly if they intended to participate in only one of them.

The Executive Directors had additional reasons for wanting the two facilities separated. As Mr. vom Hofe observed, if the resources of the two facilities were merged, the Fund’s policies on drawings and repurchases would inevitably influence the provisions attached to the new scheme. It might, for example, be impossible to apply liberal transfer rules to the new facility. Mr. Faber stressed that separation of the two facilities would make it clear that the new scheme was self-supporting. The Executive Directors emphasized that, when a new facility distinct from the Fund’s normal operations was set up, two separate sets of accounts would be required. Separate accounts were essential because the new facility would have a completely different financial structure from that of the rest of the Fund. Countries’ drawings under the new facility would have to be distinguished from their usual drawings. It was also vital that the new facility not be subsidized by the Fund, nor be used to finance the Fund. In addition, because there would be limits to participants’ obligations to accept the new asset, it would not be a complete substitute for gold; the extent to which the Fund’s resources in the two kinds of facility could be substituted for each other or combined should therefore also be restricted.

Executive Directors’ Reactions

In sum, both tentative outlines of June 1967 provided that the new facility, whatever its name, would be separate from the rest of the Fund’s operations and that no backing would be needed in any case. They were also very much alike in their provisions for the distribution (or issuance) of reserve drawing rights (or units), for the voting procedure necessary to make decisions on creation, for a participant (or member) being able to opt out of a given distribution of drawing rights (or units), for the cancellation of drawing rights (or units), and for their use and transfer.

When the tentative outlines were considered by the Executive Directors in informal session in June 1967, Mr. vom Hofe and Mr. Larre, noting the similarities, characterized them, somewhat unfavorably, as “identical twins.” Mr. vom Hofe wondered whether those who had favored reserve units would find the outline on units to their liking. Mr. Larre thought that what the staff had drawn up under the title of a drawing rights scheme was in fact a reserve unit scheme, and he hoped that the discussions would “progress back” to the “genuine” drawing rights scheme of March 1966.

Mr. Handfield-Jones and Mr. Dale, both of whom had favored reserve units, agreed that the two outlines were very similar in substance. In reply to Mr. Larre, Mr. Handfield-Jones stated that, conversely, one could conclude that the reserve unit scheme was really a drawing rights scheme. Mr. Handfield-Jones and Mr. Dale stressed an important difference between the two outlines so far as their appearance was concerned: a reserve unit was preferable to a drawing right in that world public opinion would find a reserve unit a more convincing new asset than a drawing right. But they welcomed the convergence of views on so many points of a reserve plan.

Not only was the form of reserve creation still undecided, but other issues were also still unresolved: the rules for use and transfer; the conditions under which a participant could choose not to receive a given distribution, that is, to opt out; and the much argued subjects of reconstitution and voting majorities.

Rules for Use and Transfer

The issue whether the transfer of drawing rights should be “direct,” from one participant to another, or “indirect,” through some intermediary such as the Fund, had been resolved by June 1967. All transferability was considered to be, in effect, indirect: The bookkeeping was to be done by the Fund, and there could be no transfer of the new asset without a change in ownership being recorded on the books of the Fund. But much had to be made more precise here, too, especially as it became apparent that the new facility would have resources and accounts separate from the Fund’s regular resources and accounts. Mr. Suzuki, for instance, was anxious for a clarification of how the recording and accounting system for the new facility would work: What kind of a balance sheet would the reserve drawing account have, since it could not be a conventional one? Would the recording differ for direct and indirect transfers? Would the Fund have to hold currencies or counterpart deposits as transfers were made that would have to show on the Fund’s books?

Guided Transfer?

There were other unanswered questions regarding transfers of the new reserve asset: Should transferability be voluntary, or guided by the Fund in the sense that the Fund would designate which participants should encash the new reserve unit? If transfers were to be guided, what rules would govern such guidance? Should transfers be subject to some test that the transferring country had a suitable defined need?

The eec countries had been advocating different transfer rules for creditors than for debtors. If a country was in a net creditor position in the system and found a country in a net debtor position that was willing to accept its drawing rights, the creditor country should be free to effect a direct transfer. But a country that was in a debtor position should, when utilizing its drawing rights, be subject to guidance, to a test of balance of payments need, and to rules for reconstitution. Mr. Larre expressed this thought in the Executive Board and believed that most, if not all, transfers would have to be guided. This was not to say that he liked guidance, but if the scheme was to work one had to accept it. Moreover, in his view it would be very difficult to mix guided transfers with voluntary transfers. If guided transfers were to be the rule, voluntary transfers should be the exception, perhaps limited to transfers from a creditor to a debtor.

A related issue was precisely how the Fund would guide transfers. The positions of the Executive Directors for the eec countries were similar to those being expressed by their representatives at Group of Ten meetings. Mr. Larre was in favor of letting the Fund choose the currencies to be provided, but according to given rules. Mr. Herman Biron (Belgium, Alternate to Mr. van Campenhout) suggested that it would be preferable to specify in detail the rules for transfers in the amended Articles. Mr. Siglienti and Mr. Larre both believed that the provisions for converting drawing rights into currency should be closely related to those for normal drawings on the Fund.

The complications of working out rules for the use and transfer of a reserve asset were suggested by a number of questions that Mr. Diz raised. Might not the size of a particular transaction have a bearing on how transfer was to be made? Could the Fund direct transfers to a member that was ready, even when it had reached the limit of its holdings, to accept more units; or would the member have to rely on voluntary transfers if it wanted its holdings to go beyond the limits established? Would any acceptance limits established apply only to guided transfers, so that voluntary transfers could be accepted over and above those limits? Would voluntary transfers that had already been accepted be taken into account when the Fund considered the direction in which to guide additional transfers? And what would the transferor receive in exchange for the reserve units or drawing rights that it was transferring? Mr. Faber and Mr. Madan, too, raised questions about how “large” or “excessive” or “sustained” use of the new units would be defined.

Balance of Payments Test?

While the staff had been working on the tentative outlines, they had sought the views of the Executive Directors also about whether participants would be able to exchange the new assets for convertible currency for any reason at all or whether they would be unable to transfer the new assets unless they had some need to do so. The staff believed that it would be safer if the plan was based on the principle that transfer of the new assets was subject to a test of need. The logic of reconstitution was that some kind of test of need was required. If countries were expected to reconstitute their positions when they could or when such reconstitution was necessary, it was implied that they would not transfer the assets in the first place unless they had some kind of need to do so. Furthermore, complete freedom of transfer would have adverse implications for the liquidity of the scheme, although the effects might not be very important statistically. If many small countries decided to transfer most of their new assets to the reserve centers, the acceptance limits of the reserve centers would, to that extent, be filled up.

The position of Mr. Larre was that a test of balance of payments need was very important. He reasoned that a new reserve could only be used in one of two ways, either to meet a balance of payments need or to change the composition of one’s reserves. He believed that virtually everyone was on record as not wanting the new reserve to be used to change the composition of reserves and was surprised that some were reluctant to accept a test of need. But other Executive Directors favored freedom of use of the new asset, in that transfer, possibly direct, would be permitted even where a balance of payments need was not proved. In their view, the safeguard that there must be a willing transferee was sufficient. Where the transferor sought guidance as to when and to whom to transfer the asset, however, it would be appropriate to have a test of need.

Freely Usable or Not?

The issue underlying the rules for the use of the new reserve asset really revolved around the question of how freely usable the new asset would be. Positions differed between those, such as in the United States, the United Kingdom, and the Fund, who wanted the asset to be free of restrictions so that it would quickly become acceptable as a substitute for traditional reserves, and those, like the French, who wanted to retain a unique role for gold and to place limitations on the use of the new asset.

Messrs. Dale, González del Valle, Handfield-Jones, Kafka, Lieftinck, and Alfredo Phillips O. (Mexico) stressed that they wanted the new asset to be founded on the concept of a reserve asset and not on a credit concept; the new reserves to be created were supposed to be unconditional assets, not conditional ones. They exhibited the same fear of overrestricting the new asset that was even more evident later when the rules for reconstitution were discussed. They worried that the new reserve asset would be encumbered with features that made it little different from the Fund’s usual drawing facilities. If use of the new asset was to be subject to a balance of payments test, if there was to be guided transferability with the Fund directing the transfer of the new asset in much the same way that the Fund already provided guidance for the selection of currencies for its normal transactions, and if rigid rules for reconstituting members’ positions in the new assets were drawn up, what was the difference between the new asset and the Fund’s usual facilities? Mr. Lieftinck said pointedly that a drawing rights scheme with separate resources and hemmed in by restraints was very similar to the Fund’s gold tranche and super gold tranche arrangements. Yet the new reserve was to be sufficiently novel and distinctive so as to justify changes in the Fund’s voting structure and decision-making process.

This issue as to how much the new reserve would be subject to constraints was to be basic to the discussions of the next two or three months.

Fourth Joint Meeting

When the Executive Directors and the Deputies of the Group of Ten, meeting independently in late May and early June, considered the tentative outlines and the provisions that might go into a revised outline, it became clear that some of the eec countries had a strong preference for drawing rights rather than reserve units.9 To these countries, drawing rights seemed more in the nature of a familiar form of credit than of “new money” which might compete with, or supplant, gold. Nevertheless, both of the June outlines were presented for consideration at the fourth joint meeting of Executive Directors and Deputies of the Group of Ten (held in Paris on June 19–21, 1967), and at that meeting no firm decision was taken on whether the new reserve facility would be based on drawing rights or on reserve units. In the discussions, however, more attention was given to the drawing rights scheme and the term drawing rights was used fairly freely to characterize the new reserve that was likely to be created.10

Some Issues Resolved

Broad agreement was reached on many points. Any new reserve would have a gold-value guarantee and would earn interest. The new reserve facility would be administered by the Fund, either in the Fund itself or through an affiliate, but in any event would be kept separate, both in accounting and use, from the Fund’s regular resources. All members of the Fund would be entitled to participate. Specified prerequisites for the initial creation of new reserves would have to be met. Distributions, now called allocations, would be made on the basis of the world’s long-term need for reserves, normally for periods of five years, and would be distributed to participants in proportion to their Fund quotas. The Managing Director would make proposals for allocations (previously called creation) after consulting members to make sure that any proposal would be supported by a large majority.

As the drawing rights scheme was being discussed, some principles concerning the use and acceptance of the new drawing rights were also agreed. A participant would normally use its drawing rights only for balance of payments needs and not solely for changing the composition of its reserves. The Fund should see to it that currencies were requested from participants that had strong balance of payments and reserve positions, but it should aim at asking for currencies from these participants in such a way that their holdings of the new drawing rights in relation to their total reserves would approach more or less equal ratios. Participants should be obliged to provide their currency for use by other members up to a certain multiple of the drawing rights allocated to them. Drawing rights under the new facility, after they had been used in a large measure and over an extended period, should be subject to reconstitution.

Issues Not Yet Resolved

Nevertheless, because there were still strong differences of opinion on several matters, a number of questions remained open. A choice among three possibilities for the voting majority necessary before reserves could be created was left in the outline: One possibility was the proposal of the eec countries that called for a majority of 85 per cent of the total voting power of the participants plus one half of the major creditor countries. The second was the U.S. “band” proposal, which called for a range of from 75 per cent to 90 per cent of the total voting power of the participants. A third possibility, suggested by the Fund staff, left open the required percentage but proposed that the voting power be adjusted according to the individual creditor positions of countries participating in the scheme. Some of the Executive Directors for developing countries, Mr. Kafka, for instance, argued against larger votes being given to countries that were creditors in the scheme.

One suggestion concerning voting, which was made by Mr. Joge during the fourth joint meeting, considerably disturbed most of the Executive Directors—that the Executive Directors cast their votes on reserve proposals according to the instructions given them by the individual countries that had appointed or elected them to the Board instead of on a bloc basis as they usually did. Most Directors were strongly opposed to such “separate” or “split” voting. Mr. vom Hofe, for example, considered that such a procedure would destroy the meaning and importance of the Executive Board. It would not be possible to confine this procedure to voting on reserve questions. Countries that were unable to nominate an Executive Director of their own would soon insist that this kind of voting procedure apply to other matters. The result would be that Executive Directors would not be able to change their minds on major problems or explain their motives to one another or negotiate compromises acceptable to all the participants for whom they spoke, because every Executive Director would have binding instructions. Similarly, Mr. Siglienti thought that split voting would open a Pandora’s box, with more disadvantages than advantages. Messrs. Biron, Handfield-Jones, Kafka, Lieftinck, Madan, Stone, Wass, and Antoine W. Yaméogo (Upper Volta) also expressed vigorous opposition to split voting.

Also left open were the provisions concerning reconstitution of participants’ positions in the new drawing rights. Five alternative formulations regarding reconstitution remained in the outline after the fourth joint meeting. The basic questions still unanswered were the following: Should the reconstitution obligations arise only in cases where a large and persistent use of the new drawing rights affected adversely the liquidity of the whole scheme, or should reconstitution be the more general rule? Should it be left to the Fund to determine in each case what constituted a large and sustained use of the new drawing rights, or should there be precise rules, and if so, what rules? Should a participant’s full initial position be reconstituted, or rather the use of the new drawing rights in proportion to the participant’s use of its total reserves? Should the precise rules and definition of the reconstitution obligation be laid down now or later, and should they be revised in the light of subsequent experience?

Another unresolved question was whether the new facility should be run by an affiliate organization of the Fund or by the Fund itself. It had become evident that an affiliate of the Fund, requiring a new organization and another set of voting procedures, need not be established at all. As the General Counsel reported to the Executive Directors in June 1967, the simplest way to put a plan into legal effect was to attach another Article (or Articles) to the existing Articles of Agreement. With the additional Articles, there could be, under the aegis of the Fund, two separate accounts—one for the Fund’s general facilities and another for the proposed facility. In order to have a legal bridge between these two accounts, some amendments to individual Articles might also have to be made, but no new distinct structure such as the irf, or the iru, or some other organization, need be set up.11

Also unsettled was whether a participant would be able to opt out from the beginning of the scheme or only after a certain minimum distribution of new drawing rights had been made. The staff had proposed that opting out should occur only after an amount of new drawing rights equal to 50 per cent of Fund quotas had been distributed; this amount would help the scheme to get going before participants began to opt out. And it was not yet clear whether, in the event that it was a drawing rights scheme that emerged, the name of the new assets should be simply “special drawing rights,” or whether it should be “special reserve drawing rights” in order to emphasize the reserve character of the assets.

Results Uncertain

Because these crucial points of difference had not been reconciled, many Executive Directors, for instance, Mr. González del Valle, Mr. Kafka, and Mr. Stone, regarded the fourth joint meeting as anticlimactic. In their view, the future course of action was uncertain. Should more joint meetings with the Deputies be held before the Annual Meeting? Could an outline be ready for the Annual Meeting, or might negotiations have to continue after the Annual Meeting?

At a press conference after the fourth joint meeting, Mr. Emminger and Mr. Schweitzer made public their uncertainty about what had been achieved.12 While important progress toward agreement on a plan had been made with the acceptance by all countries of the principle of reconstitution or reimbursement in case of “excessive use,” the precise form of reconstitution and, in particular, the definition of excessive use would have to be considered at a ministerial meeting of the Group of Ten. When Mr. Emminger was asked what he thought were the prospects for the achievement of concrete results at the ministerial level, he replied that, in his opinion, the chances for a positive outcome “were somewhat more than 50 per cent.”

Drafting a Final Outline

Following the fourth joint meeting, the staff prepared a draft of a final outline as a working document to set out the major unsettled issues as fully and as clearly as possible. The topics on which views differed were put between brackets, and alternative proposals on a number of subjects were included. The facility described was to be based on drawing rights.

In drafting this working document, and later the amendments to the Articles, great care was taken to find a terminology that would not jeopardize the compromise that seemed to be emerging.13 Since the concept of a reserve asset was still unacceptable to some of the negotiating countries, terms like assets, reserves, and even reserve drawing rights and special reserve drawing rights—terms that had been used in the past—were shunned. The final outline spoke throughout of special drawing rights. An initial sentence was introduced to indicate the purpose of the new facility: “The facility described in this Outline is intended to meet the need, as and when it arises, for a supplement to existing reserve assets.”14 The words a supplement to existing reserve assets had been substituted for the language of previous documents, which had referred to supplementing existing forms of reserves with additional reserve assets.

Avoidance of a vocabulary that suggested the bringing into existence of new reserve assets or the transmission of reserve assets among participants in operations and transactions was the reason for what the General Counsel has characterized as “a less energetic terminology” that had been used in earlier discussions. Words like creation, distribution, issuance, and transfer disappeared. Allocation was substituted for distribution and issuance, and cancellation was preferred to recall. Transfer, transferor, and transferee were avoided in favor of formulations involving the word use. Even the title of the outline referred to a facility based on special drawing rights. Some words, like reconstitution, were entirely novel, not having been applied before to a medium of exchange.

The choice of this terminology was quite deliberate. Its use was instrumental in reconciling opposing positions. Words were selected that were not only innocuous but in some ways ambiguous, so as to make agreement possible. In the words of the General Counsel, it “enabled the proponents of divergent views to insist that their opinions had prevailed.”15 Each participant in the Special Drawing Account could decide for itself, for example, whether special drawing rights were or were not reserve assets.

The effort expended in the search for a suitable terminology was only part of the much larger effort required to reach final agreement, but it was considerable. The merit of this careful terminology has been recognized even by those not directly involved in its selection. Professor Fritz Machlup, for example, has praised the negotiators for finding a solution to their difficulties by avoiding all terms that had established connotations in economics:

This conflict was resolved, almost miraculously, by extraordinarily efficient mediators applying the recipe of avoiding all the words which the nations had written on their banners and for which they were valiantly battling. The words “credit,” “credit facility,” “reserve asset,” “reserve units,” “borrowed reserves,” “owned reserves,” “loans,” “repayments”—all of them were, with great circumspection, avoided in the Outline drafted. Words not burdened with a history of controversy, not associated with recognizable ideologies, and not widely used in monetary theories, words, therefore, with still neutral and not always fixed connotations were put in place of the old, battle-scarred and now banished words.16

Outline Agreed by Group of Ten

The continuing differences of view on a number of key points among the countries of the Group of Ten had to be settled at the highest level. Early in June 1967 the Finance Ministers of the eec countries had reached agreement on several points. They favored a new facility in the framework of the Fund, with separate accounting but no affiliate organization. Transferability was a technical rather than a political question. An 85 per cent voting majority should be required for allocation of any new reserve. Any new reserve should be subject to reconstitution. And the establishment of a new reserve should be paralleled by “improvements in the practices of the Fund.”

Changes in Fund’s Rules and Practices

The last point had reference to changes in the Fund’s rules and practices that the French authorities had suggested some months before.17 Subsequently, on June 26, 1967, a memorandum was addressed to the Managing Director by the five Executive Directors for the six countries of the eec—Messrs. van Campenhout, Lieftinck, Larre, Siglienti, and vom Hofe. This memorandum proposed that the Fund staff undertake a study of certain subjects corresponding to those that had been included in a report of the Monetary Committee of the eec (dated April 11, 1967) which, because of their operational character, raised technical questions. The subjects included making drawings in the gold tranche legally automatic, tightening conditions on drawings in the credit tranches, and redefining par values only in terms of gold rather than in terms of U.S. dollars or gold. By August 1967 the staff had prepared a paper dealing with the legal points taken up in the memorandum, and the Executive Board agreed that, along with the outline for a reserve facility, it would review these practices of the Fund.18

Voting Issue Decided

After the eec ministerial agreement in June, the Finance Ministers and Central Bank Governors of the Group of Ten met twice, in London in July and August, under the chairmanship of Mr. Callaghan, U.K. Chancellor of the Exchequer.

At their meeting on July 17 and 18, 1967, the question of the voting majority came close to resolution. A majority of 85 per cent of the total voting power of the Board of Governors would be required for decisions involving the basic periods for allocation and cancellation of the new special drawing rights, for the amounts to be allocated, and for the rate of allocation. The Managing Director told the Ministers that several of the Executive Directors, especially those appointed or elected by developing countries, objected to voting arrangements that gave effective veto power to an individual country and felt strongly that the rest of the eec proposal—that at least half the major creditor countries ought to concur in any decision about special drawing rights—should not be a part of the voting arrangement. Hence, this feature was not included in the final Outline.

Reconstitution Unresolved

Opposing views on reconstitution persisted, however. Mr. Debré, Minister of Economy and Finance, France, continued to believe that strict rules on reconstitution were essential and should be spelled out. The new unit was a credit and not a reserve. It had to be repaid. But he would limit the precise rules for reconstitution to the first five-year period, after which the rules could be reassessed. The opposing view, presented mainly by Mr. Fowler, Secretary of the Treasury, United States, was that if the new asset was surrounded by rules it might never become accepted as a reserve.

Mr. Colombo, Minister of the Treasury, Italy, supporting an idea offered at the fourth joint meeting of Executive Directors and Deputies by Mr. Ossola, introduced the principle of harmonization, according to which participants would from time to time be asked to reconstitute their outstanding special drawing rights to the extent necessary to restore the reserve position that would have obtained if they had used their special drawing rights in the same proportion as their total reserves. This arrangement would, he argued, both ensure the liquidity of the new scheme and facilitate a better working of the adjustment process, the two aims of reconstitution, without detracting from the credibility of the asset, since the new asset would be closely tied to traditional reserve assets. The alternative principle for reconstitution that had been suggested by the French authorities at previous discussions, a formula based on the average net use by a participant of its special drawing rights, had the disadvantage, Mr. Colombo thought, of freezing debtor positions below a certain ceiling. The principle of harmonization could best be implemented, he believed, in a system of guided transferability.

Renewed Efforts to Reach Agreement

If an outline was to be ready for the Annual Meeting in September, time was running out. The Deputies of the Group of Ten hoped to work intensively during the latter part of July and in August to resolve the areas of difference among their countries without another meeting of the Finance Ministers and Central Bank Governors. But, as the Managing Director had made clear at the ministerial meeting in July, the document that was to go to the Fund’s Governors must be in the form of a resolution proposed by the Executive Board, to which would be attached an outline that the Executive Directors had approved. The outline as agreed by the Group of Ten would, therefore, have to come back to the Executive Directors, and they in turn would have to have enough time to examine it, to agree on a draft resolution, and to confer with their authorities. That was the only way in which to get “proposals acceptable to all,” the phrase of the communiqué of the Group of Ten itself.19

In the next weeks there were to be extremely intensive negotiations by the Executive Directors and by the Deputies of the Group of Ten. As background to these negotiations, the Fund staff had prepared papers explaining some suggested provisions: why the obligation of each participant to accept the new drawing rights should equal twice the amount distributed, so that each participant would be obliged to hold the new drawing rights in amounts up to three times its net cumulative allocation; what opting out arrangements should apply; and what provisions should govern reconstitution.

Several Executive Directors objected to mechanical formulas and rigid requirements for reconstitution. Mr. Madan noted that the Ossola concept of harmonization was based on the proportionality of use of new assets in relation to other reserves by transferor countries as against proportionality of the holdings of new assets, both of which were possible ways of harmonizing reserves. Because the use of traditional reserves was sometimes subject to statutory requirements, there was an important difference between these two techniques of harmonization. Mr. Dale agreed that it was difficult to know exactly what different formulas would mean. Both Mr. Madan and Mr. Stone emphasized that any provisions for reconstitution should take into account the diversity of balance of payments situations that member countries would encounter over the years ahead.

By the end of July 1967, following a meeting in Paris on July 27 and 28, the Deputies of the Group of Ten had agreed on a version of the outline to put before their Ministers and Governors at a second meeting set for late in August in London. The word reserve had been dropped from the name of the facility, leaving the term special drawing rights. There was to be a separate account in the Fund rather than an affiliate. The section on opting out was put in general language, to be settled after the Annual Meeting in Rio de Janeiro. There were still two proposals on voting. The distinction between the concept of direct and indirect transfers and the concept of guided and unguided transfers was not maintained. The Fund would make the rules governing the extent to which all transactions should be guided.

The five alternative formulations for reconstitution were reduced to two. The first was based essentially on a net average use, a French proposal explained by Mr. Paul Mentré (France, Alternate to Mr. Larre). Reconstitution would be based on the average debit position of a drawing participant calculated on the basis of the last four years; it would never exceed 50 per cent of a participant’s average allocations of drawing rights over this reference period. The second alternative for reconstitution was based on the principle of the proportionality of use along the lines of the ideas for harmonization.

Rules for Reconstitution Agreed

At their meeting in London on August 26, the Ministers and Governors of the Group of Ten agreed finally on the general principles for reconstitution and on the rules for reconstitution to be applied during the first basic period. These were ideas that had been suggested by the Fund’s General Counsel at a meeting of the Deputies. The proposal that finally broke the deadlock over the reconstitution provisions was that they could be changed later without the need to amend the Articles. Participants that used their special drawing rights would incur an obligation to reconstitute their positions in accordance with principles which would take account of the amount and duration of the use. The reconstitution principles would be laid down in the Rules and Regulations of the Fund rather than in the Articles of Agreement. For drawings made in the first basic period of five years, the principal rule of reconstitution should be that over any period of five years a member’s net average use of the new facility should not exceed 70 per cent of its net cumulative allocation. Participants should also pay due regard to the desirability of pursuing over time a balanced relationship between their holdings of special drawing rights and other reserves. These reconstitution provisions were to be reviewed before the end of the first period.

Approval of Outline by Board of Governors

The Executive Board approved the draft Outline on September 6, 1967, and two days later approved the text of a draft resolution for transmission to the Governors. Mr. Saad had proposed that the voting majority required for decisions on the basic period for, timing of, and rate of allocation of, special drawing rights should be 80 per cent of the total voting power of the participants, and not 85 per cent, and wanted his opposition to the proposed 85 per cent majority to be recorded at a formal Executive Board meeting and also at the meeting of the Board of Governors. He abstained from approving the draft Outline.

On September 11 the Fund released the text of an “Outline of a Facility Based on Special Drawing Rights in the Fund.”

At the closing session of the Annual Meeting in Rio de Janeiro (September 29, 1967), the Board of Governors adopted the resolution, to which was attached the Outline.20 It requested the Executive Directors to proceed with work relating both to the establishment in the Fund of a new facility based on the Outline and to improvements in the rules and practices of the Fund, and to propose amendments to the Articles on these matters. There had been some feeling, especially by the U.S. authorities, that the new facility and the so-called reform of the Fund should not be linked in the same resolution because, inter alia, the reform had not had adequate consideration and it might take longer to get approval in the U.S. Congress for it than for the special drawing rights facility. It was not even certain that the staff could prepare in time all the needed amendments for both the new facility and the changes in rules and practices. It was nevertheless agreed that both topics should be combined in a single resolution.

The Managing Director described the proposed new arrangements for international liquidity as the most significant development in international financial cooperation since Bretton Woods.21 Most of the Governors shared his view. Mr. Karl Schiller (Federal Republic of Germany) commented on the importance of tying the reform of the Fund to the establishment of the new drawing rights.22 Mr. Callaghan (United Kingdom) called attention to the importance of the universality of the scheme.23 Governors for the developing countries also supported the scheme, both because it was universally applied and because it operated through the Fund.

Mr. Callaghan and Mr. Fowler expressed their intention of treating the new drawing rights as “front-line” or “first-line” reserves.24 Mr. Debré (France), in contrast, took the position that the introduction of special drawing rights in no way constituted “a revolutionary step.” They did not and could not “establish a new currency designed to replace gold.” The plan provided for “the possible extending of credit facilities.” The nature of the proposed new facility was “a limited but important one.”25

Only an Outline

Thus, finally, after years of negotiation, a contingency plan for reserve creation was agreed, with the cumbersome name, “Outline of a Facility Based on Special Drawing Rights in the Fund.” The plan was still an outline: the precise drafting of an amendment to the Articles of Agreement was yet to come. The particular considerations that would govern the activation of the plan, as well as the principles on which all decisions to allocate the new asset were to be based, would be described in an introductory section of the amendment and, to the extent necessary, in a report explaining the amendment.

Nonetheless, the basic ingredients of a contingency plan had been decided. Deliberate creation of liquidity, when it was considered necessary, was to be accomplished through the International Monetary Fund, not through any of the other arrangements that had been proposed. The new facility was to be set up through amendment of the Articles. Thus the existing organizational structure of the Fund would be used and there would be no need for a separate affiliate. New reserves would take the form of so-called drawing rights, not reserve units, and the drawing rights would be special ones, entirely separate from existing drawing rights in the Fund. Participation in the new arrangements would be open to all Fund members; distribution of the new asset would not be restricted to a limited group. There would be no currency contribution or financial backing required of the participants; the character of the special drawing right as an asset would depend entirely on the obligation of participants to exchange it for convertible currency. Limits to this obligation were spelled out in the Outline as were the general principles that the Fund would use to guide the transfer of the special drawing rights. Procedures for deciding how often, exactly when, and in what amounts the special drawing rights were to be allocated were also set out; an 85 per cent majority of the total voting power of the participants for these decisions to become effective was also to be required.

For use of the new drawing rights there would be a balance of payments test. The Outline provided for guided as well as for some voluntary transfers. Guidance by the Fund would be basically similar to the practices already followed in the Fund for selecting the currencies to be used when a member drew from the Fund; that is, participants with strong balance of payments and healthy reserve positions would encash the special drawing rights and in such amounts that participants would hold over time equal ratios of them to their total reserves. This rule of equalizing the ratios of special drawing rights to participants’ total reserves would be supplemented by a special provision permitting a reserve center that wanted to buy balances of its currency held by another country to direct its drawing specifically to that country, provided that the latter agreed.

There would also be an obligation by participants to reconstitute their positions, and the Outline specified the principles on which the rules and regulations governing reconstitution would be based. For those participants that were unhappy with the detailed rules for reconstitution, the Outline provided that the rules would be reviewed before the end of the first, and of each subsequent, period in which special drawing rights were allocated and that new rules could be adopted if necessary. For those participants that continued firm in their conviction that strict rules for reconstitution were essential, the Outline specifically noted that the same 85 per cent majority of voting power that was required for decisions to allocate special drawing rights would also be required for decisions to adopt, amend, or abrogate rules for reconstitution.26

The Fund now turned to the major task of incorporating the new facility into its Articles.

Table 2.Participants and Observers at Third and Fourth Joint Meetings of Executive Directors of Fund and Deputies of Group of Ten, 19671
Pierre-Paul Schweitzer, Managing Director (3,4)
Frank A. Southard, Jr., Deputy Managing Director (3)
Executive Directors and Alternates2Constituency3
William B. Dale (3,4)United States
John S. Hooker (3,4)
Adolfo C. Diz (3,4)Argentina, Bolivia, Chile, Ecuador, Paraguay, Uruguay
Yamandú S. Patrón (3,4)
Paul L. Faber (3,4)Burundi, Guinea, Kenya, Liberia, Malawi, Mali, Nigeria, Sierra Leone, Sudan, Tanzania, Trinidad and Tobago, Uganda, Zambia
Leonard A. Williams (3,4)
Torben Friis (3,4)Denmark, Finland, Iceland, Norway, Sweden
Jorma Aranko (3,4)
Jorge González del Valle (3,4)Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Venezuela
Alfredo Phillips O. (3,4)
S.J. Handfield-Jones (3,4)Canada, Guyana, Ireland, Jamaica
Patrick M. Reid (3,4)
Alexandre Kafka (3,4)Brazil, Colombia, Dominican Republic, Haiti, Panama, Peru
Paulo H. Pereira Lira (3,4)
René Larre (3,4)France
Gérard M. Teyssier (3,4)
Pieter Lieftinck (3,4)Cyprus, Israel, Netherlands, Yugoslavia
H.M.H.A. van der Valk (3,4)
B.K. Madan (3,4)India
Arun K. Banerji (3,4)
Amon Nikoi (3,4)Algeria, Ghana, Laos, Libyan Arab Republic, Malaysia, Morocco, Singapore, Tunisia
Muhamad Barmawie Alwie (3)
Sergio Siglienti (3,4)Greece, Italy, Portugal, Spain
Costa P. Caranicas (3,4)
J.M. Stevens (3,4)United Kingdom
Douglas W.G. Wass (3,4)
J.O. Stone (3,4)Australia, New Zealand, South Africa
A.M. de Villiers (3,4)
Hideo Suzuki (3,4)Burma, Ceylon, Japan, Nepal, Thailand
Eiji Ozaki (3,4)
Beue Tann (3)Republic of China, Korea, Viet-Nam
Chi-Ling Chow (3,4)
André van Campenhout (3,4)Austria, Belgium, Luxembourg, Turkey
Herman Biron (3,4)
Ernst vom Hofe (3,4)Federal Republic of Germany
Horst Ungerer (3,4)
Antoine W. Yaméogo (3,4)Cameroon, Central African Republic, Chad, Dahomey, Gabon, Ivory Coast, Malagasy Republic, Mauritania, Niger, People’s Republic of the Congo, Rwanda, Senegal, Togo, Upper Volta, Zaïre
Léon M. Rajaobelina (3,4)
Joseph Gold, The General Counsel (3,4)
J.J. Polak, The Economic Counsellor (3,4)
W. Lawrence Hebbard, Secretary of the Fund (3,4)
Jean-Paul Sallé, Director, Office in Europe (3,4)
J. Marcus Fleming, Deputy Director, Research and Statistics Department (3,4)
George Nicoletopoulos, Deputy General Counsel (3,4)
F.L. Hall, Personal Assistant to the Managing Director (3,4)
Cecil de Strycker, Director, National Bank of Belgium (3,4)Jacques Mertens de Wilmars, Adviser to the Board, National Bank of Belgium (3,4)
Marcel D’Haeze, Director of the Treasury and Public Debt, Ministry of Finance (3,4)
A.B. Hockin, Assistant Deputy Minister of Finance, Department of Finance (3,4)W.A. Kennett, Adviser, Department of Finance (3,4)
R.W. Lawson, Deputy Governor, Bank of Canada (3,4)W.C. Hood, Adviser, Bank of Canada (3,4)
Maurice Pérouse, Director of Treasury, Ministry of Economy and Finance (3,4)Jean-Yves Haberer, Technical Counsellor to the Minister of Finance (3,4)
Bernard Clappier, Deputy Governor, Bank of France (3,4)Daniel Deguen, Assistant Director of Treasury, Ministry of Economy and Finance (3,4)
Otmar Emminger, Member, Board of Directors, Deutsche Bundesbank (3,4)Wolfgang Rieke, Division Chief, Deutsche Bundesbank (3,4)
Lore Fuenfgelt, Division Chief, Ministry of Economic Affairs (3,4)Erich Stoffers, Office of Executive Director for Federal Republic of Germany, International Monetary Fund (3)
W. Flandorffer, German Delegation to Organization for Economic Cooperation and Development (4)
Rinaldo Ossola, Director of the International Economics Research Department, Bank of Italy (3,4)L. Fronzoni, Representative in Brussels, Bank of Italy (3)
E. Valle, Representative in Paris, Bank of Italy (4)
Giorgio Rota, Chief Inspector, Ministry of the Treasury (3,4)L. Fronzoni, Representative in Brussels, Bank of Italy (4)
S. Montanaro, International Economics Research Department, Bank of Italy (4)
Yusuke Kashiwagi, Director, International Finance Bureau, Ministry of Finance (3,4)Keijiro Tanaka, Chief, International Organizations Section, International Finance Bureau, Ministry of Finance (3,4)
Haruo Mayekawa, Executive Director, Bank of Japan (3,4)Daizo Hoshino, Adviser, Bank of Japan (3,4)
E. van Lennep, Treasurer General, Ministry of Finance (3,4)D.M.N. van Wensveen, Head, International Monetary Affairs Department, Ministry of Finance (3,4)
G.A. Kessler, Managing Director, Netherlands Bank (3,4)Baron A.W.R. MacKay, Deputy Director, Netherlands Bank (3,4)
Sven F. Joge, Deputy Governor, Sveriges Riksbank (3,4)A. Lindå, Head of Division, Sveriges Riksbank (3,4)
L. Klackenberg, Counsellor, Ministry of Finance (3,4)J. Nipstad, Ministry of Finance (3,4)
Sir Denis Rickett, Second Secretary of the Treasury (3,4)D.F. Hubback, H.M. Treasury (3)
L.P. Thompson-McCausland, H.M. Treasury (3,4)
C.J. Morse, Executive Director, Bank of England (3,4)C.W. McMahon, Adviser to the Governors, Bank of England (3,4)
Frederick L. Deming, Under Secretary of the Treasury for Monetary Affairs (3,4)George H. Willis, Deputy to the Assistant Secretary for International Monetary Affairs (3,4)
J. Dewey Daane, Member, Board of Governors of the Federal Reserve System (3,4)Robert Solomon, Adviser to Board of Governors of the Federal Reserve System (3,4)
M. Iklé, Managing Director, Swiss National Bank (3,4)J. Lademann, Director, Swiss National Bank (3,4)
Jean Cottier, Deputy Secretary General, Organization for Economic Cooperation and Development (3,4)J.C.R. Dow, Assistant Secretary General for Economics and Statistics, Organization for Economic Cooperation and Development (3)
Milton Gilbert, Economic Adviser, Bank for International Settlements (3,4)

Third meeting, April 24–26, 1967, Washington; fourth meeting, June 19–21, 1967, Paris. The numbers in parentheses indicate which of the two meetings the individual attended.

Alternate Executive Directors, always appointed by the Executive Director, are indicated by italic type.

Only 19 of the 20 constituencies that appointed or elected Executive Directors were represented at the joint meetings because neither Mr. Ahmed Zaki Saad (Egypt) nor his Alternate, Mr. Albert Mansour (Egypt), attended. See also Chap. 30, p. 626.

Not including two persons who served as members of the secretariat.

Third meeting, April 24–26, 1967, Washington; fourth meeting, June 19–21, 1967, Paris. The numbers in parentheses indicate which of the two meetings the individual attended.

Alternate Executive Directors, always appointed by the Executive Director, are indicated by italic type.

Only 19 of the 20 constituencies that appointed or elected Executive Directors were represented at the joint meetings because neither Mr. Ahmed Zaki Saad (Egypt) nor his Alternate, Mr. Albert Mansour (Egypt), attended. See also Chap. 30, p. 626.

Not including two persons who served as members of the secretariat.

The reader is reminded that the term world reserves as used by the Fund meant the reserves of its members plus Switzerland.

Annual Report, 1967, Chap. 2 (pp. 11–25).

Chap. 20 below recounts developments in gold markets.

The 1967 devaluation of sterling is the subject of Chap. 21 below.

Table 2 lists the names and positions of the participants in the third joint meeting; see pp. 162–65 below.

“Outline of an Illustrative Reserve Unit Scheme” (February 23, 1967), and “Outline of an Illustrative Scheme for a Special Reserve Facility Based on Drawing Rights in the Fund” (February 28, 1967); Vol. II below, pp. 15–23 and 24–29.

See History, 1945–65, Vol. I, pp. 18 and 36.

All three tentative outlines are published below, Vol. II, pp. 30–34, 35–39, and 40–44.

In May 1967 Mr. Emminger also circulated a paper for consideration by the Deputies—“Outline of a Reserve Drawing Rights (RDR) Scheme.”

The names and positions of the participants in the fourth joint meeting are given in Table 2; see below, pp. 162–65.

For a detailed discussion of the choices and the reasons for the final technique chosen, see Joseph Gold, “Legal Technique in the Creation of a New International Reserve Asset: Special Drawing Rights and the Amendment of the Articles of Agreement of the International Monetary Fund,” Case Western Reserve Journal of International Law, Vol. 1 (1969), pp. 105–23.

International Financial News Survey, Vol. 19 (1967), pp. 205–206.

How the choice of language influenced the drafting of the final Outline and later on also the amendments to the Articles has been described by Joseph Gold in his Special Drawing Rights: The Role of Language, IMF Pamphlet Series, No. 15 (Washington, 1971). (Hereinafter cited as Gold, Special Drawing Rights: Role of Language.)

Gold, Special Drawing Rights: Role of Language, p. 18.

Gold, Special Drawing Rights: Role of Language, p. 2.

Fritz Machlup, Remaking the International Monetary System: The Rio Agreement and Beyond, Committee for Economic Development, Supplementary Paper No. 24 (Baltimore, 1968), p. 9.

See Chap. 5 above, pp. 131–32.

These changes in the Fund’s rules and practices are described in detail in Chap. 13 below.

Communiqué of the Ministers and Central Bank Governors of the Group of Ten, July 18, 1967, International Financial News Survey, Vol. 19 (1967), p. 229.

The “Outline of a Facility Based on Special Drawing Rights in the Fund” is reproduced below, Vol. II, pp. 47–51. Resolution No. 22-8 is also reproduced below, Vol. II, pp. 54–55.

Opening Address by the Managing Director, Summary Proceedings, 1967, p. 21.

Statement by the Governor of the World Bank for the Federal Republic of Germany, Summary Proceedings, 1967, p. 46.

Statement by the Governor of the Fund for the United Kingdom, Summary Proceedings, 1967, p. 58.

Statements by the Governor of the Fund for the United Kingdom and the Governor of the Fund and the World Bank for the United States, Summary Proceedings, 1967, pp. 58 and 82.

Statement by the Governor of the World Bank for France, Summary Proceedings, 1967, p. 67.

The Outline has been discussed in detail by Joseph Gold, “The Next Stage in the Development of International Monetary Law: The Deliberate Control of Liquidity,” American Journal of International Law, Vol. 62 (1968), pp. 365–402.

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