IMF History (1966-1971) Volume 1

Chapter 9: How SDRs Evolved: A Synopsis

International Monetary Fund
Published Date:
February 1996
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The Principal Events bearing on the creation of SDRs are listed here in brief form and chronological order. This synopsis has three objectives: (1) to juxtapose the developments in different forums (such as in the Fund, in the Group of Ten, and among technical experts) that were taking place concurrently; (2) to highlight the dates and decisions of the most fruitful of the numerous meetings that took place; and (3) to bring to the forefront the nature of the Fund’s part in the formation of SDRs.

As a corollary, this synopsis brings out the modifications in several of the Fund’s policies on the use of its resources and in its financial structure that took place partly in response to, or at least in the course of, the prolonged deliberations on international liquidity, especially in the early 1960s. Among the by-products of the discussions of liquidity were increases in Fund quotas, the establishment of the General Arrangements to Borrow, changes in the policies on purchases in the gold tranche, and the extension and liberalization of the compensatory financing facility. These by-products are described in separate chapters below or in the earlier history. It is worthwhile, however, to note here their geneses in the discussions that eventually led to SDRs.

April–October 1953At the request of Ecosoc, the Fund studied world reserve adequacy and in a report, “The Adequacy of Monetary Reserves,” defined adequacy.
August–September 1958A study by the Fund staff on international liquidity, presented to the Annual Meeting (New Delhi), examined the subject of reserves afresh and questioned the adequacy of the Fund’s resources, then about $9 billion.
December 1958External convertibility was established for the currencies of 14 European countries. Thus, a majority of the Fund’s members now permitted nonresidents to transfer current earnings of their currencies to any other country.
March 1959Robert Triffin, Yale University, proposed that an enlarged and amended Fund should provide a new kind of international reserve and that all reserves except gold should be centralized in the Fund.
September 1959A 50 per cent general increase in quotas and special increases in the quotas of certain countries became effective, expanding the Fund’s resources by about $6 billion, to more than $14 billion.
January–DecemberAs world trade increased rapidly, as movements of short-term capital began to take place relatively freely, and as pressures on gold reserves emerged, several monetary experts made proposals for expanding world liquidity:
Maxwell Stamp, United Kingdom, proposed the Stamp Plan. The Plan combined the needs of the industrial countries for additional liquidity with the needs of the developing countries for more capital.
Edward M. Bernstein, United States, and Robert V. Roosa, U.S. Treasury, suggested that the gold exchange standard be broadened by a system of “multiple reserve currencies.” On the other hand, Jacques Rueff, France, advocated increasing the price of gold, and Milton Friedman, University of Chicago, advocated introducing freely flexible exchange rates as an alternative to expanding reserves.
SeptemberThe Fund’s Annual Report stressed that the concept of international liquidity was broader than that of international reserves and should include the gold and foreign exchange held by the Fund.
SeptemberThe Managing Director, Per Jacobsson, at the Annual Meeting (Washington), observed that most Governors believed that the emerging problem of international movements of funds could be met within the existing international financial system and that there was no lack of international liquidity.
FebruaryNine European countries accepted the obligations of Article VIII of the Fund Agreement; hence, they were committed to convertibility of their currencies, and liquid funds began to flow more freely than ever across national boundaries and into a greater number of convertible currencies.
MarchTo cope with increased short-term capital flows, which were aggravating payments imbalances in several industrial countries, inter-central-bank cooperation was strengthened. Under the Basle Agreement, the Governors of the central banks of Belgium, France, the Federal Republic of Germany, Italy, the Netherlands, Sweden, and the United Kingdom agreed to hold each other’s currencies to a greater extent than before and to lend needed currencies to each other.
JulyThe Executive Board took a decision to permit members to use the Fund’s resources to meet balance of payments deficits that were attributable to capital transfers.
SeptemberThe Fund’s Annual Report observed that members were increasingly regarding their drawing rights in the Fund as part of their reserves.
SeptemberThe Managing Director, Per Jacobsson, at the Annual Meeting (Vienna), emphasized the steps that the Fund was taking to help meet the impact of international movements of private funds and stressed the need to enlarge the Fund’s resources for emergencies, such as arrangements for the Fund to borrow from its principal members.
OctoberThe London Gold Pool was formed, an arrangement whereby a number of countries agreed to share the burden of intervention in the London gold market to keep fluctuations in the price of gold within a reasonable range.
FebruaryThe United States, through the Federal Reserve System, introduced “swap” facilities, i.e., the central banks of the main industrial countries would provide each other with reciprocal lines of credit.
JulyThe Executive Board took a decision which widened the selection of currencies that could be used in members’ transactions with the Fund, thus augmenting considerably the Fund’s supply of usable resources.
SeptemberThe Fund’s Annual Report described the problems created by the growing volatility of short-term capital and how these problems were being handled by the strengthening of inter-central-bank cooperation and by new measures being taken by the Fund.
SeptemberThe Managing Director, Per Jacobsson, at the Annual Meeting (Washington), spelled out the reasons for his confidence in the existing international monetary system and reiterated his view that there was, as yet, no liquidity crisis.
SeptemberXenophon Zolotas, Greece, at the Annual Meeting (Washington), proposed a multiple-currency gold exchange standard.
SeptemberReginald Maudling, United Kingdom, at the Annual Meeting (Washington), proposed a mutual currency account.
OctoberThe General Arrangements to Borrow entered into force, enlarging by $6 billion the resources to which the Fund had access.
April–JulyMany central bankers, while recognizing that the existing volume of world liquidity might be adequate, began to question whether it would continue to be so in the future. The world’s holdings of official reserves had ceased to grow and there was a widening realization that, as the United States closed its balance of payments gap, the supply of dollar reserves for other countries would be reduced. On the other hand, some monetary officials in Europe contended that the major problem was not the supply of liquidity but rather how to improve the process of balance of payments adjustment.
JulyThe countries in the Group of Ten prepared to discuss the question of liquidity among themselves during the forthcoming Annual Meeting of the Fund.
SeptemberThe Fund’s Annual Report stressed the central role of the Fund in matters concerning international liquidity.
OctoberThe Managing Director, Pierre-Paul Schweitzer, announced at the Annual Meeting (Washington), that the Fund would intensify its study of international liquidity, the functioning of the international monetary system, and the role of the Fund in that field.
OctoberValéry Giscard d’Estaing, France, at the Annual Meeting (Washington), repeated his view that the fundamental difficulty with the international monetary system was not a shortage of liquidity but a lack of mechanisms for correcting balance of payments disequilibria.
OctoberThe Finance Ministers and Central Bank Governors of the Group of Ten, after a special meeting during the Fund’s Annual Meeting, instructed their Deputies to undertake a thorough examination of the international monetary system and of the probable future need for liquidity. The terms of reference for these studies specified that a system of fixed exchange rates would continue to prevail and that the price of gold would remain unchanged. They also urged the reserve currency countries to eliminate their payments deficits. The Deputies were instructed to maintain close working relations with the Fund.
OctoberThe Managing Director, Pierre-Paul Schweitzer, outlined for the Executive Board a program of studies on liquidity on which the Fund would begin.
OctoberEdward M. Bernstein, United States, proposed that the countries of the Group of Ten, plus Switzerland, should establish a composite reserve unit (CRU) equivalent to gold, consisting of a stated proportion of each of their currencies.
JanuaryThe Executive Directors held informal sessions to discuss the studies on liquidity that the Fund would undertake. The Managing Director, Pierre-Paul Schweitzer, suggested that, as part of these studies, the general adequacy of Fund quotas and the Fund’s policies on gold tranche drawings should be examined.
AugustThe Executive Board took a decision which modified the Fund’s procedures so that gold tranche drawings could take place more quickly and more nearly automatically.
AugustThe Fund’s Annual Report (Chapters 3 and 4) dealt at length with the subject of liquidity. A distinction was made between conditional and unconditional liquidity, and it was noted that the Fund had been much the largest creator of conditional liquidity, in the form of drawing rights financed under the Fund’s system of quotas. The Report concluded (1) that there was a case for a second round of increases in Fund quotas, (2) that the general level of liquidity then existing was broadly satisfactory but that some inadequacies might arise in the future, and (3) that any new liquidity arrangements or mechanism should be based on a multilateral institutional approach.
AugustA report by the Deputies of the Group of Ten (1) suggested that Working Party 3 of the oecd should study how members of the oecd could achieve faster and more effective adjustment of their payments imbalances, (2) proposed that multilateral surveillance be continued and intensified, and (3) established a Study Group on the Creation of Reserve Assets, under the chairmanship of Rinaldo Ossola, Italy, to consider the need for a new reserve asset.
AugustThe Finance Ministers and Central Bank Governors of the Group of Ten agreed that supplies of gold and reserve currencies were fully adequate for the present, but approved the formation of the Ossola Group to study future needs. They agreed also to support a moderate increase in Fund quotas during 1965 and to re-examine the question of renewing the General Arrangements to Borrow.
AugustThe report on a series of informal conferences held in Bellagio by an unofficial group of academic and government economists was published. In general, these economists concluded that various alternative solutions to the existing international monetary problems—such as a multiple reserve currency system, flexible exchange rates, a semiautomatic gold standard, or the centralization of all reserves—were not so diametrically opposed as they once had thought.
SeptemberAt the Annual Meeting (Tokyo), Governors still expressed divergent views on how urgently something needed to be done about expanding the supply of liquidity. The Managing Director, Pierre-Paul Schweitzer, was strongly in favor of having any new arrangements undertaken in the Fund and of including all members in any such arrangements.
SeptemberThe Board of Governors, at the Annual Meeting (Tokyo), resolved that the Executive Directors should consider an increase in Fund quotas and submit an appropriate proposal at an early date.
OctoberThe Fund staff, partly in response to requests from the Deputies of the Group of Ten, began to explore ways by which the Fund might engage in deliberate reserve creation. Two techniques were examined: (1) extension of quasi-automatic drawing facilities and (2) acquisition of special assets and assumption of additional liabilities.
FebruaryPresident Charles de Gaulle, France, and his Minister of Economy and Finance, Valéry Giscard d’Estaing, called for a return to the gold standard.
MarchThe Board of Governors adopted resolutions proposing an increase of 25 per cent in the quotas of all Fund members and special increases for 16 members.
MarchRobert V. Roosa, U.S. Treasury, proposed that a type of CRU be established by the main industrial countries.
MarchValéry Giscard d’Estaing, Minister of Economy and Finance, France, put forward a French version of a CRU plan.
JuneThe Managing Director, Pierre-Paul Schweitzer, speaking in Paris, (1) observed that the present international monetary system had worked well, but that large short-term capital movements had caused difficulties, (2) rejected the need for a change in the price of gold, (3) advocated correction of balance of payments deficits by the United Kingdom and the United States, and (4) expressed a preference for liquidity schemes which operated through the Fund with participation by all members.
JulyHenry H. Fowler, Secretary of the U.S. Treasury, considered early action on liquidity essential and urged establishment of a preparatory committee to arrange for an international monetary conference.
AugustThe report of the Ossola Group was published. Various techniques for deliberate reserve creation were examined, but no preference was expressed. Differences of view still persisted on such questions as the nature of a link between any new reserve asset and gold, the number of participating countries, the role of the Fund in any scheme, and the rules by which decisions to create liquidity would be made.
AugustThe Fund’s Annual Report described several problems of principle and technique that were involved in any scheme for reserve creation and concluded that, even if there was no need for immediate creation of additional reserves, it was important to consider well in advance the many questions involved. The Report also suggested ways in which reserves could be created through the Fund.
SeptemberDuring the Annual Meeting (Washington), the Finance Ministers and Central Bank Governors of the Group of Ten issued a communiqué reporting their agreement to draw up a plan for reserve creation that could be put into effect should the need arise, i.e., a contingency plan. They also recognized that, once the countries of the Group of Ten had agreed on essential points, a second phase of the discussions should include countries outside the Group of Ten. They instructed their Deputies to work out with the Managing Director of the Fund procedures by which the efforts of the Executive Directors of the Fund and of the Deputies of the Group of Ten could be directed toward a consensus.
SeptemberThe Managing Director, Pierre-Paul Schweitzer, at the Annual Meeting (Washington), (1) reiterated his belief that international liquidity was the business of the Fund, (2) suggested that, rather than a special international monetary conference, the Board of Governors of the Fund would serve ideally as a way to bring together high-level financial and monetary authorities, and (3) again advocated that any new liquidity facilities should be available to all Fund members.
NovemberThe Expert Group on International Monetary Issues set up by the Unctad in September, after holding meetings in New York in October, issued a report, International Monetary Issues and the Developing Countries. The report recommended, inter alia, enlarging and liberalizing the Fund’s compensatory financing facility and concluded that (1) the establishment of a link between the creation of international liquidity and the provision of development finance was both feasible and desirable, (2) the reform of the international monetary system should be truly international, and (3) developing countries should be represented in the discussions leading to monetary reform and in the operation of any new arrangements.
NovemberIt was agreed that the Managing Director’s representatives at the meetings of the Deputies of the Group of Ten could report on the proceedings, in general terms, to the Executive Directors.
NovemberThe staff and the Executive Board began to consider extending the Fund’s compensatory financing facility.
JanuaryFour plans for deliberate reserve creation were submitted to the Deputies of the Group of Ten—by the United States, by Otmar Emminger, by the United Kingdom, and by Canada. All four provided for creation of a reserve asset by a limited group of countries. Three of the plans provided for a “dual approach,” i.e., for two kinds of co-existing arrangements, a new reserve asset for a limited group of countries and some kind of additional drawing rights in the Fund—the U.S. plan called them “special reserve drawing rights”—either for all countries or for those not included in the reserve asset scheme.
FebruaryA special session of the Unctad Committee on Invisibles and Financing Related to Trade, meeting in New York, endorsed the report of the Unctad group of experts that had been issued in November 1965.
FebruarySeveral Executive Directors elected by countries not in the Group of Ten, uneasy about the discussions going on in the Deputies of that Group, as well as about a possible “dual approach,” made a plea for the Fund to submit its own proposals for deliberate reserve creation.
FebruaryThe second general increase in Fund quotas, along with special increases for some countries, became effective for those members that had consented to increases in their quotas. With the consent of all members to the increases, the Fund’s resources would be expanded from $16 billion to $21 billion.
MarchAt the request of the Inter-American Committee on the Alliance for Progress (ciap), four monetary officials issued a report, International Monetary Reform and Latin America, which endorsed the report of the Unctad group of experts (issued in November 1965) and stressed Latin America’s need for increased liquidity.
MarchThe Managing Director, Pierre-Paul Schweitzer, sent to the Executive Board two alternative plans for reserve creation. Plan I would use the Fund’s existing machinery to extend quasi-automatic drawing rights of the gold tranche type. Plan II would involve the issuance of reserve units by a newly organized Fund affiliate (the International Reserve Fund, or irf), membership in which would be open to all Fund members.
March–AprilThe Executive Directors in informal session held preliminary discussions of the two plans for reserve creation proposed by the Managing Director. Since these proposals had not been acted upon by the Executive Board, they were referred to as those of the Managing Director and were sent as such to the Deputies of the Group of Ten.
AprilThe Governors of the central banks of Latin America, meeting in Runaway Bay, Jamaica, expressed their views on international monetary reform in the Declaration of Jamaica. They advocated the preservation to the greatest extent possible of the existing mechanisms of the international monetary system, including the Fund as the center, and suggested further improvements within the Fund that would enlarge and facilitate the access of Latin American countries to the Fund’s resources.
AprilA number of academic economists and some of the officials of Working Party 3 of the oecd met in Princeton, New Jersey, for the second of two series of discussions on adjustment of international payments imbalances. (The first series had been held in Zurich, Switzerland, in January.)
AprilThe Managing Director, Pierre-Paul Schweitzer, addressing the Federation of German Industries at Kronberg im Taunus, Germany, emphasized the importance of avoiding any division of countries into two groups, as through a dual approach, and explained how a reserve unit scheme could cover all Fund members.
MayAmong the countries of the Group of Ten, support for a universal approach to deliberate reserve creation, as against a dual approach, began to increase.
MayA “Group of Thirty-One” developing countries reiterated a principle enunciated earlier by the Unctad Committee on Invisibles and Financing Related to Trade—that all countries should be eligible to participate in any deliberate creation of reserve assets.
JulyThe Deputies of the Group of Ten sent their report on a contingency plan for reserve creation to the Ministers and Governors. While no specific plan was presented, certain principles were enunciated: (1) deliberate reserve creation should take place on the basis of a collective judgment of the world’s reserve needs and not be directed to financing the payments deficits of individual countries; (2) deliberate reserve creation should consist of unconditional liquidity to be made available to all members of the Fund; (3) the process of decision making for reserve creation should reflect the special responsibility of the major industrial countries for the international monetary system; and (4) activation of any plan, that is, the actual creation of reserves as distinguished from contingency planning, would not take place until a separate and new decision had been taken that there was a clear need for supplementary reserves and that certain additional conditions had been fulfilled. (The Deputies’ Report was released to the public in August.)
JulyThe Finance Ministers and Central Bank Governors of the Group of Ten, after meeting in The Hague, issued a communiqué agreeing with the principles set forth in the report of the Deputies. They also reviewed the report of Working Party 3 of the oecd and expressed their hope that the Working Party would continue its work.
AugustSome of the details of the Managing Director’s proposals for reserve creation were made public in the Fund’s Annual Report (Chapter 2).
SeptemberThe Executive Board took a decision liberalizing and extending the Fund’s compensatory financing facility.
SeptemberThe Managing Director, Pierre-Paul Schweitzer, at the Annual Meeting (Washington), indicated that he knew of no technical reasons why concentrated work could not provide the Governors with fully developed suggestions for reserve creation in time for the next Annual Meeting. He announced that arrangements for informal meetings between Executive Directors and the Deputies of the Group of Ten were being discussed. At the ministerial meeting of the Group of Ten, he explained why the Executive Directors for the countries not in the Group of Ten did not want subordinate participation.
October–NovemberThe Executive Directors agreed to meet with the Deputies of the Group of Ten.
October–NovemberThe Executive Directors considered in informal sessions the procedures to be followed in their joint meetings with the Deputies of the Group of Ten and the questions to be discussed.
NovemberThe first joint meeting of Executive Directors and the Deputies of the Group of Ten was held in Washington to discuss, inter alia, the aims and form of reserve creation, the criteria for distributing new reserves, how new reserves would be transferred and their acceptance assured, and the conditions necessary for actually creating reserves under a contingency plan.
JanuaryThe second joint meeting of Executive Directors and the Deputies of the Group of Ten was held in London. The nature and form of deliberately created reserves and the utilization, transfer, and acceptance of new reserve assets were still being debated, but emphasis was on the process to be used for making decisions concerning reserve creation and on the possibility of setting up reserve units in the Fund. There was still no broad support for any one decision-making process or for any particular reserve unit plan.
JanuaryThe Finance Ministers of the six countries of the eec, meeting in The Hague, requested their experts, through the Monetary Committee of the eec, to study “almost immediately” ways of improving international credit facilities within the Fund. It began to appear that the eec countries might combine their agreement on a plan for deliberate reserve creation with suggested changes in the Fund’s voting structure and in the Fund’s policies on the use of its resources.
FebruarySome Executive Directors, believing that an important part of the continuing differences of view revolved around the question whether a plan to create liquidity should be based on reserve units or on drawing rights, and influenced by the decision of the eec in January, urged the staff to focus on how a liquidity scheme based on the familiar mechanisms of the Fund could be set up.
FebruaryTwo detailed plans for creation of liquidity, prepared by the staff, were circulated to the Executive Directors: “Outline of an Illustrative Reserve Unit Scheme,” requiring a Fund affiliate organization, and “Outline of an Illustrative Scheme for a Special Reserve Facility Based on Drawing Rights in the Fund.”
MarchHenry H. Fowler, Secretary of the U.S. Treasury, addressing the American Bankers’ Association at Pebble Beach, California, gave added impetus to a move toward a specific contingency plan for reserve creation by urging immediate agreement on such a plan.
MarchThe Managing Director and the staff suggested a procedure aimed at a resolution for adoption by the Board of Governors at their Annual Meeting in September. The resolution would instruct the Executive Directors, presumably working jointly with the Deputies of the Group of Ten, to prepare, in a reasonably short time, a concrete proposal in legal form for governments to adopt. First, a choice would have to be made between the two basic types of reserve plan. The features of the chosen plan could then be discussed at the third joint meeting of Executive Directors and the Deputies of the Group of Ten, and a final draft agreed at the fourth joint meeting.
March–AprilThe Executive Directors considered the two illustrative schemes that had been circulated to them in February. What the merits of reserve units as against drawing rights were, how strict the rules attending the transfer of units from one participant to another should be, and how the Fund would “guide” such transfers were among the principal points debated. The records of the sessions of the Executive Directors were made available to the Deputies of the Group of Ten and the minutes of some of the meetings of the Deputies, being held concurrently, were made available to the Executive Directors.
AprilThe Finance Ministers of the eec countries, after meeting in Munich, issued a communiqué stating their approval of the recommendations of the Monetary Committee of the eec. That committee had proposed (1) that any increase in international liquidity be based on an extension of the credit facilities of the Fund, (2) that new automatic drawing rights, entirely separate from other drawing rights, could be established in the Fund, and (3) that, when the Fund’s Articles were amended to include these new drawing rights, other amendments should be made, including a provision that an 85 per cent voting majority be required for various decisions in the Fund, particularly those for general changes in quotas and for the actual creation of additional reserves under a new facility.
AprilThe third joint meeting of Executive Directors and the Deputies of the Group of Ten was held in Washington. The two illustrative schemes for reserve creation were considered. Following the meeting, agreed answers still had to be found for (1) the decision-making process, (2) the rules for the use, transfer, and acceptability of the new reserve, (3) the nature of the resources backing the new reserves and whether such resources would be merged with or separated from other resources of the Fund, and (4) whether there would be any reconstitution or repurchase provisions linked with the prolonged or extensive use of the new reserve assets.
MayOtmar Emminger, Federal Republic of Germany, chairman of the Deputies, prepared an “Outline of a Reserve Drawing Rights Scheme,” for consideration by the Deputies.
May–JuneThe Fund staff issued separate papers on the four main issues on which agreement had still to be reached: the decision-making process, the rules for use of the new reserve, its financing, and reconstitution.
May–JuneDuring a meeting of the Deputies, the U.S. delegation, in an effort to pull together the results agreed on so far, submitted two papers on reserve creation.
May–JuneSeveral Executive Directors advocated that, instead of revising the illustrative schemes to meet comments made at the third joint meeting, the staff should draft an outline to be considered at the fourth joint meeting.
May–JuneThe staff prepared two outlines: “An Outline of a Reserve Facility Based on Drawing Rights in the Fund” was circulated to the Executive Board and sent by Mr. Schweitzer to Mr. Emminger, chairman of the Deputies of the Group of Ten; “An Outline of a Reserve Facility Based on Reserve Units and Administered by a Fund Affiliate” was circulated to the Executive Board about a week later, as was a revision of the first outline.
May–JuneThe above papers were considered separately both by the Executive Directors and by the Deputies. Consensus was developing on some of the features that the final outline should have, but still being hotly debated were the rules for use and transfer of the new drawing rights, the provisions that should govern the reconstitution of those rights, and the procedures for making decisions to create such drawing rights.
JuneThe fourth joint meeting of Executive Directors and the Deputies of the Group of Ten was held in Paris. Most of the points to be included in a final outline were agreed. It began to be clearer that there need not be a Fund affiliate and that the resources of the new scheme did not have to consist of a pool of currencies or of lines of credit; they could consist of the obligation on the part of participants to accept drawing rights from other participants in exchange for an equal amount of convertible currency. However, two subjects were to be referred to the Ministers and Governors of the Group of Ten: the provisions for reconstitution and for the voting majorities that would be necessary to create liquidity.
JuneThe five Executive Directors appointed or elected by the six countries of the eec sent a memorandum to the Managing Director suggesting certain changes in the Fund’s rules and practices.
July–AugustThe Ministers and Governors of the Group of Ten met in London twice and the Deputies met several times. As background for these meetings, the Fund staff, as requested by the Deputies, had prepared papers on the two aspects of special drawing rights on which agreement had not yet been reached, namely, voting procedures and reconstitution obligations. After considerable discussion, the Ministers and Governors agreed that decisions on the basic period for, timing of, and amount and rate of allocation of, what were now being called special drawing rights should be taken by the Board of Governors of the Fund by a majority of 85 per cent of the total voting power, that the process by which proposals for allocating special drawing rights would come about would be a complicated one involving the Managing Director, the Executive Board, consultations with countries, and the Board of Governors, and that participants would incur reconstitution obligations according to rules that would be specified in the Rules and Regulations of the Fund rather than put into the amended Articles.
SeptemberThe Fund’s Annual Report for 1967 devoted an entire chapter to developments in world reserves. It called attention to (1) the continued slowing down in the rate of growth of world reserves, (2) the declining proportion of gold and currencies in total reserves and the increasing proportion of reserve positions in the Fund, and (3) the enhanced financing of payments deficits by reserve currency countries through credit facilities, as against drawing down gold reserves or enlarging liquid liabilities.
SeptemberThe Executive Board approved the “Outline of a Facility Based on Special Drawing Rights in the Fund” and the text of a draft resolution for transmission to the Board of Governors.
SeptemberThe Board of Governors, at the Annual Meeting (Rio de Janeiro), adopted a resolution, to which was attached the Outline, requesting the Executive Directors to submit to them not later than March 31, 1968 a report proposing amendments to the Articles of Agreement and to the By-Laws.
DecemberThe Executive Board began consideration of a draft of a proposed amendment of the Articles of Agreement.
January–MarchThe Executive Board continued its intensive deliberations on a number of drafts of a proposed amendment of the Articles of Agreement and a related report to the Board of Governors.
MarchThe Ministers and Governors of the Group of Ten met in Stockholm to resolve their differences on ten points still at issue. They approved a draft of the proposed amendment to the Articles of Agreement. The Executive Directors would iron out further details and prepare the final draft. The French delegation reserved its position on the proposed amendment, pending a final text.
AprilThe Executive Board took a decision to adopt the report, Establishment of a Facility Based on Special Drawing Rights in the International Monetary Fund and Modifications in the Rules and Practices of the Fund, and recommended that the Board of Governors adopt a resolution approving the proposed amendment to the Articles of Agreement.
MayThe Board of Governors, without meeting, approved the proposed amendment and directed the Secretary of the Fund to ask all members whether they would accept it.
JulyFollowing acceptance by three fifths of the Fund’s members having four fifths of the total voting power, as required by the Articles of Agreement, the amendment to the Articles became effective for all members.
AugustMembers having 75 per cent of the total of quotas in the Fund had deposited instruments of participation, and the Special Drawing Account was established.
SeptemberThe draft amendments to the Rules and Regulations relating to the amended Articles were adopted by the Executive Board.
OctoberThe Board of Governors, at the Annual Meeting (Washington), resolved that it had reviewed the amendments to the Rules and Regulations adopted by the Executive Board and had no changes to suggest.
OctoberThe Board of Governors, at the Annual Meeting (Washington), adopted the amendments to the By-Laws relating to the amended Articles.

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