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IMF History (1972-1978) Volume 3
Chapter

Background to Formation of the Committee of Twenty

Author(s):
International Monetary Fund
Published Date:
February 1996
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Early in 1972 the idea of establishing a separate body to negotiate reform of the international monetary system had begun to be considered. The main forum that was considered was a committee of the Fund’s Board of Governors. A paper prepared by the General Counsel and Director of the Legal Department, Joseph Gold, in January 1972 presented an illustrative plan for a committee of the Board of Governors to serve as a forum for the reform negotiations. That paper contained as an attachment a detailed paper that the General Counsel had prepared in 1969 on how a committee of the Board of Governors might work. These papers are published as (A) below.

In March 1972, after the Executive Directors had held seminars in which they discussed such a committee, two supplements to the paper of January 1972 were prepared by the staff and circulated to the Executive Board. These supplements showed the variants of the illustrative plan for a committee of the Board of Governors that had been suggested by the Executive Directors. The two supplements appear as (B) and (C) below.

(A) An Advisory Committee of the Board of Governors Outline of an Illustrative Plan

(January 24, 1972)

1. Introduction

When the informal meetings of executive directors were held in 1969 to discuss various reforms, a number of executive directors expressed interest in the idea that the Board of Governors should establish an advisory committee to consider issues affecting the international monetary system which would fall within the committee’s terms of reference. The Legal Department prepared Discussion Paper No. 35 (May 16, 1969), which is reproduced as the attachment to this memorandum.

There has been renewed interest on the part of some executive directors and others in arrangements comparable to those that are examined in Discussion Paper No. 35, particularly in connection with the forthcoming deliberations on the evolution of the international monetary system. The Executive Directors might consider it opportune to revive discussion of the establishment of an advisory committee of the Board of Governors. In order to facilitate any such discussion, the present memorandum sets forth the outline of an illustrative plan for a committee based on Discussion Paper No. 35.

2. Outline of Illustrative Plan

(a) Membership

The member or members that had appointed or elected an executive director would be regarded as a constituency. Each constituency would appoint two ministers having primary financial responsibilities or governors of central banks (referred to herein as principals) of a member or members in the constituency. The two principals need not come from the same member. Each principal would appoint a deputy, but the two principals could make a joint appointment of a single deputy. A deputy need not come from the same member as the principals. There could be provision also for the appointment of a temporary deputy who would be able to attend a meeting of the committee in the absence of the deputy.

(b) Mode of appointment

The members of the committee would be appointed before the conclusion of the Annual Meeting of the Board of Governors in each year in which the regular elections of executive directors take place. The governors for the Fund in each constituency would agree on the appointments. The governor with the largest quota in a constituency would inform the Secretary of the Fund of the appointments to the committee.

(c) Term

The members of the committee appointed under (a) would serve for the period of the two years between regular elections of executive directors. A special procedure could be adopted for the first committee if it were to be appointed before the 1972 Annual Meeting. The successor in office of a principal would complete the term of his predecessor.

(d) The level of meetings

The committee would meet either at the level of principals or at the level of deputies. In the absence of a principal, his deputy would be able to act for him.

(e) Chairmen

The principals and deputies would meet before the end of the Annual Meeting of the Board of Governors at which they were appointed and each group would select its chairman. Chairmen would hold office for the full period, unless the committee prescribed some shorter period.

(f) Managing Director

The Managing Director would be a member of the committee as a principal. He would appoint members of the staff of the Fund to attend meetings as his deputies.

(g) Meetings

The committee would be convoked at the level of principals or deputies by the appropriate chairman. The committee would meet, either as principals or deputies, at least once a year between Annual Meetings of the Board of Governors, and at such other times as the chairman thought desirable after consulting principals or deputies as the case might be. Meetings would be held at the headquarters of the Fund or at such other place as the chairman determined after consulting principals or deputies as the case might be.

(h) Meetings of deputies and executive directors

Meetings of the deputies and executive directors of the Fund would be held for any purpose within (m) below by agreement between the chairman of the deputies and the Managing Director.

(i) Attendance

The quorum for a meeting of principals or deputies would be a majority of the committee. The committee would be able to determine the number of advisors that each member of the committee could bring to meetings. The committee would be able to invite persons other than principals or deputies to participate in its meetings.

(j) Procedures and administration

The committee would establish its own working procedures. The staff of the Fund would provide services to the committee.

(k) Reports

Any recommendations or views of the committee would be adopted by the sense of the meeting, but minority views would be recorded and reported. Any reports of the principals, including recommendations or views, would be made to the Board of Governors, and would be available to the Executive Directors. Reports of the deputies, including recommendations or views, would be made to the principals, and would be available to the Executive Directors.

(l) Establishment

The Board of Governors would establish the committee by a resolution which included the main elements in broad outline. The full “charter” of the committee would be set forth in a By-Law of the Board of Governors.

(m) Terms of reference

The mandatory meeting between Annual Meetings of the Board of Governors would be held to review international monetary developments. The committee could be convoked on other occasions to advise the Board of Governors on any question within the reserved powers of the Board of Governors, or on any other question if it affected the international monetary system as a whole. The chairman, after consulting principals or deputies as the case might be, would determine whether a meeting should be held to consider a question.

ATTACHMENT A Note on an Advisory Committee of the Board of Governors Discussion Paper No. 35

(May 16, 1969)

I. Past Practices

It may be useful to recall past practice in connection with the appointment of committees of the Board of Governors and comparable procedures.

1. Board of Governors Committees

(a) Procedures committee

At the Inaugural Meeting in Savannah in March 1946, the Boards of Governors of the Fund and the Bank set up a Joint Procedures Committee to deal exclusively with procedural matters and to be available for consultation with the Chairman of the Board of Governors immediately after the Inaugural Meeting until the next Annual Meeting. The original proposal by the Governor for the United States was to establish an “Executive Committee,” which was described as a “steering committee,” to which matters might be referred, “particularly in the way of procedure.” The name proposed for the committee was believed to connote some conflict with the powers and functions of the Executive Directors, and therefore the name “Procedures Committee” was substituted. Later in the Inaugural Meeting, a proposal was made to refer the question of one member’s request for a quota adjustment to the Procedures Committee in order to avoid the delay that might be involved in a referral to the Executive Directors. Chairman Vinson, in taking the position that the matter should be studied by the Executive Directors first, said “I do think it would be inadvisable for the Procedures Committee, which, as you all remember, is not a committee on substantive matters, to consider this particular issue.”1

The terms of reference of the First Joint Procedures Committee were as follows:

Resolved:

That a Procedures Committee of twelve Governors be constituted, consisting of those Governors who were appointed members of the Executive Committee of the Board at this meeting of the Board to be available after the termination of this meeting and until the next annual meeting of the Board for consultation at the discretion of the Chairman, normally by correspondence and also, if occasion required, by convening immediately before the annual meeting of the Board.

Similar terms of reference have been granted to each of the subsequent Joint Procedures Committees.

The terms of reference and membership of the current Joint Procedures Committee are set forth in Report No. III of the 1967/68 Joint Procedures Committee as follows:

The Committee recommends that the Governors for Argentina be Chairmen, and that the Governors for Belgium and Nepal be Vice Chairmen, of the Boards of Governors of the Bank and its affiliates and of the Fund, to hold office until the close of the next Annual Meetings.

It is further recommended that, as in the past, a Joint Procedures Committee be established to be available, after the termination of these Meetings and until the close of the next Annual Meetings, for consultation at the discretion of the Chairman normally by correspondence and, if the occasion requires, by convening; and that this Committee shall consist of the Governors for the following members: Argentina, Belgium, Costa Rica, Dominican Republic, France, Gabon, Germany, India, Italy, Kuwait, Libya, Nepal, Philippines, Rwanda, Saudi Arabia, Sweden, Trinidad and Tobago, United Kingdom, United States, and Zambia.

It is recommended that the Chairmen of the Joint Procedures Committee shall be the Governors for Argentina and the Vice Chairmen shall be the Governors for Belgium and Nepal, and that the Governor for Zambia shall serve as Reporting Member.2

At the 1957 Annual Meeting, the Chairman of the Joint Procedures Committee noted a suggestion from the Secretaries that the procedure for the Meeting be simplified by the elimination of special committees. Since that time it has not been the practice to appoint special committees to discuss substantive business. The Joint Procedures Committee now considers the items of business on the agenda of a Meeting and the recommendations of the Executive Directors with respect to them, and the Committee recommends action by the Board of Governors on these matters.

According to some observers, the Joint Procedures Committee assumed greater importance at the 1968 Annual Meeting. Questions have been raised in connection with the right of attendance by delegations whose governors are not members of the Committee and the rules that are followed in determining the composition of the Committee. It was noted in the discussion of these questions that there are no rules on the membership of the Committee but that the practice since the first Joint Procedures Committee in 1946 has been to limit attendance at meetings of the Committee to members of the Committee. The Secretary explained at a meeting of the Executive Directors “that the membership of the Procedures Committee was carefully arranged to ensure that, aside from the countries appointing Executive Directors, a balance among the various geographical areas was maintained, with no country going too long without a seat.” In commenting on the remarks that had been made about the Procedures Committee at the meeting, the Acting Chairman of the Executive Directors said “that for many years its meetings had been attended only by the Executive Directors of the member countries, whereas now that the Committee had assumed a more active role, suggestions for reforms were being made.”

The Secretary recently circulated to the Executive Board a document on Annual Meeting arrangements which contains the following passage with respect to the composition of the Procedures Committee and attendance of nonmembers of the Committee at its meetings:

The Procedures Committee generally includes the members appointing Executive Directors, and about 15 more selected so as to provide a wide geographical representation and balanced frequency of membership of individual countries. As an alternative to the suggestion that all nonmember Governors attend the Procedures Committee as observers—which would make a very large gathering—arrangements could be made for elected Executive Directors to attend Procedures Committee Meetings so as to be able to inform Governors of non-Committee countries of the proceedings.

(b) Special committees

Before the 1957 Annual Meeting, there was much discussion of both substantive and procedural questions during Annual Meetings in committees established by the Board of Governors. From time to time, committees were established to consider certain subjects covered in the Annual Reports, e.g., Organization and Administration (1949), Exchange Policy (1950), Exchange Restrictions (1950), Gold (1949), Exchange Restrictions and Fund Transactions (1951), Payments, Par Values, and Gold (1951). The terms of reference, composition, and chairmanship of the committees were established by the Board of Governors on the recommendations of the Procedures Committee. The Managing Director participated in the discussions of some of these committees. The committees reported to the Board of Governors and sometimes recommended a resolution for adoption by the Board. Some of these resolutions contemplated action by the Executive Directors.

On a few occasions, the technique of subcommittees was used. This took place at the 1946 Annual Meeting when the Committee on Rules and Regulations established a subcommittee to consider a proposed resolution on silver submitted by the Governor for Mexico and another subcommittee to consider a request by Denmark that arrangements be made by which the Danish Governor might vote for one of the executive directors elected at the Inaugural Meeting. In 1967 the Chairman of the Board of Governors was authorized to appoint a subcommittee of the Procedures Committee to draft a proposed resolution on the stabilization of commodity prices.

As mentioned in (a) above, during the 1957 Annual Meeting the Chairman of the Joint Procedures Committee noted a suggestion for simplifying the procedure of the Meeting by eliminating committees that discussed aspects of the Annual Report. Since that Meeting it has not been the practice to appoint special committees for the discussion of substantive business.

(c) Discussion groups

At the 1949 Annual Meeting, the Board of Governors established two discussion groups, one of which was to consider exchange and monetary policy and the other to consider exchange restrictions and monetary reserves. These groups were appointed in accordance with the recommendation of the Joint Procedures Committee of the 1948 Annual Meeting that “consideration should be given to the desirability of encouraging full and open discussions among the Governors on matters of substance and policy relating to the Fund.” This proposal had been made by the Governor for the United States. The Managing Director was the Chairman of these two groups, and he made an oral report to the Board of Governors on the deliberations of the groups. This same recommendation of the 1948 Joint Procedures Committee was responsible for the appointment of committees at the 1950 Annual Meeting, but discussion groups have not been established on any other occasion.

(d) Proposal for midyear meetings

At the 1956 Annual Meeting of the Board of Governors, the Governor for Canada suggested that more of the executive directors might be chosen from senior officials of treasuries or central banks who continued to have operating responsibilities in their own countries. These executive directors would come to Washington “a few times a year for scheduled meetings to deal with policy questions and other important matters which were ripe for consideration.” He pointed out that Western European officials had an opportunity to consult among themselves in the Managing Board of the European Payments Union, the Bank for International Settlements, and elsewhere, “and I believe that the adoption of similar working methods by the Fund might be of great benefit to non-European members. By the same token, it might be beneficial for European countries to hear the views and learn at first hand the problems of other countries which the opportunity to talk things over would provide.” The Chancellor of the Exchequer of the United Kingdom supported the Canadian proposal.3

Mr. Jacobsson felt that he could not concur in this proposal, but it is understood that it led him to suggest consideration of a meeting in Washington in February of each year or in every other year of senior officials from treasuries and central banks, without excluding finance ministers or governors of central banks if countries should wish to have them attend. The purpose of these meetings would be to discuss informally the world payments and economic situation, to allow personal contacts among the officials of different countries, and to permit the spokesmen of individual countries to raise in a confidential manner any new problems relating to the Fund’s work or general objectives. Attendance by the ten members with the largest quotas and by ten others on a rotational basis was suggested. The Executive Directors and a limited number of staff would be entitled to attend.

In his speech at the 1957 Annual Meeting, Mr. Jacobsson, when commenting on the Canadian proposal, said that

It would be possible to hold at the headquarters of the Fund every year, or every second year, a meeting of a limited number of highly placed persons in the various member countries, and among them senior operating officials, to discuss informally some of the problems facing the Fund and its members.

Much work was done in the Fund at staff level, with the Managing Director taking an active interest, on arrangements for “midyear meetings,” as they came to be called. A major feature of this work was the attempt to determine the composition of those attending. One suggestion from the staff was that the members invited to attend would be those serving on the Joint Procedures Committee on the ground that the Committee was available until the next Annual Meeting. It was also suggested by the staff that the membership of the Committee be increased from twelve to eighteen or nineteen, and that it should always include the ten members with the largest quotas. In addition, nine (or even ten) would be chosen in rotation from Europe, Latin America, the Middle East, and the Far East. The members chosen from each geographical group could vary from year to year, but the intention would be that each member country would serve on the Committee at least once every five or six years. The frequency as thus calculated of appearance on the Committee was based on the smaller membership of the late 1950s.

The idea of a midyear meeting was considered sufficiently realistic to warrant the tentative reservation of space at a local hotel for February 1959, but on November 28, 1958 the Managing Director decided not to carry the matter forward.

(e) Proposed committee for “Stage 2”

At one time, a Board of Governors Committee was considered for what was called “Stage 2” of the liquidity debate.

The United States prepared a proposal for a Board of Governors Advisory Committee on Reserve Creation that would have been composed of the ministers and central bank governors from each of the Ten, and from two members in Africa, three in Asia, one in “non-Ten” Europe, two in Latin America, and one in Oceania and South Africa. The committee was to vote in accordance with the weighted voting system of the Articles. The Managing Director did not endorse this proposal. He preferred an advisory committee of the Deputies of the Ten and executive directors, in part because the formula would make use of the ready-made geographical representation embodied in the Executive Directors. At an informal session, there was a range of reactions among executive directors to these ideas, including outright opposition to any committee of the Board of Governors. The discussion led to no consensus, but the Managing Director stressed that his idea avoided political problems because all members would be represented as in the Executive Directors. In contrast to the U.S. proposal, there would have been no voting in the committee.

The Deputies of the Ten considered the possibility of an Advisory Committee of the Board of Governors on Reserve Creation, composed of the finance ministers and central bank governors of the Group of Ten and ministers and central bank governors from the main geographical areas, selected broadly in proportion to their shares in total quotas. The committee would prepare a specific contingency plan and report to the Board of Governors. The deputies did not accept this proposal in their report of July 8, 1966. Instead, the communiqué of The Hague meeting (July 25-26, 1966) recommended joint meetings of executive directors and deputies. The Executive Directors authorized the Managing Director to make arrangements for these meetings, and four joint meetings were held in late 1966 and the spring of 1967.

II. Legal Aspects

Some legal questions may be asked in connection with the establishment of an Advisory Committee of the Board of Governors.

1. Status of Committee

There is no provision empowering the Board of Governors to appoint committees, but Article XII, Section 3(k) provides as follows for committees appointed by the Executive Directors:

The Executive Directors may appoint such committees as they deem advisable. Membership of committees need not be limited to governors or directors or their alternates.

It is likely that no express provision was thought necessary for the Board of Governors because it is a normal feature of the powers of an organ, and a fortiori a senior organ, to appoint committees. It has been seen that the Board of Governors has appointed committees on numerous occasions, and this is common practice among other international organizations as well. The Executive Directors exercise powers that in the main are delegated to them, and probably for this reason it was thought desirable to make it clear that they could appoint subordinate bodies in the form of committees.

Article XII, Section 3(k) speaks of the power of the Executive Directors to appoint committees without declaring that they are to be committees of the Executive Directors. It might be suggested, therefore, that the Executive Directors have the authority under this provision to appoint committees of the Board of Governors. This proposition should be approached skeptically. According to normal parliamentary practice, committees appointed by an organ are responsible to that organ. This would preclude the establishment by the Executive Directors of a committee that answered to the Board of Governors. The reference to “governors” in Article XII, Section 3(k) does not justify a different conclusion. Even if a committee established by the Executive Directors were to be composed entirely of governors, that committee would still be a committee of, and answerable to, the Executive Directors.

2. Membership

It is not completely clear whether the second sentence of Article XII, Section 3(k) applies only to committees of the Executive Directors or applies to committees of the Board of Governors also. In any event, there is every reason to assume that the powers of the Board of Governors are as broad as those of the Executive Directors in determining the membership of committees. Therefore, membership in committees appointed by the Board of Governors need not be confined to governors but could include other persons. It could be provided, for example, that finance ministers or central bank governors could be members of a committee of the Board of Governors even though they were not governors. The conclusion that the Board of Governors may determine the composition of its committees as it sees fit corresponds with the practice of other international organizations.

The governors of the Fund are finance ministers or central bank governors in almost equal proportions. In some member countries, it is prescribed by statute that the central bank governor shall be the governor for the Fund. In others, the central bank, either alone or in collaboration with others, appoints the governor for the Fund. Sometimes, the Executive has the power to name the governor; and, under some statutes, this power is to be exercised on the basis of nominations by the central bank or according to some other procedure. There are other statutes under which the finance minister, either alone or in collaboration with other ministers, is empowered to carry out the member’s obligations arising from acceptance of the Articles. Presumably, the finance minister is able to appoint the governor and may appoint himself or some other person.

One question that arises is whether an alternate governor would be entitled to sit as the substitute for a governor on any committee to which the governor was appointed. There is nothing explicit on this in the Articles or the By-Laws. Article XII, Section 2(a) deals with alternate governors in relation to the Board of Governors itself, and it is implied that they are entitled to attend meetings and vote when the governor is not present. This follows from the sentence: “No alternate may vote except in the absence of his principal.”

It has been the practice for alternate governors to attend committee meetings whether or not their principals were present. There appears to be no reason, however, why it could not be provided by the Board of Governors that attendance at the meetings of a particular committee was to be confined to governors to the exclusion of alternate governors. The language of Article XII, Section 3(k) supports the view that the appointment of a governor to a committee does not give the alternate an absolute right to sit in place of the governor. The second sentence declares that “[m]embership of committees need not be limited to governors or directors or their alternates.” If the appointment of a governor carried with it the invariable right of the alternate to sit in place of the governor, there would have been no need to mention alternates. It is true that this sentence may refer only to committees of the Executive Directors, but there is no reason why the principle would not be the same for committees of the Board of Governors.

In any event, the question would not even arise if appointments to a committee were made not qua governor but in some other capacity. For example, if the committee consisted of member countries or persons appointed as finance ministers or central bank governors, there would be no basis at all for the contention that if some of them were also governors of the Fund their alternates would be entitled to sit and could not be prevented from sitting.

3. Attendance at Meetings

In the case of all Committees of the Executive Directors, and all but one of the Committees of the Board of Governors, nonmembers of a committee may attend committee meetings as observers. In the case of the Procedures Committee of the Board of Governors, the rule is that attendance by nonmembers as observers is precluded. If the past practice of the Procedures Committee were followed, nonmembers would not be entitled to attend as observers at meetings of an advisory committee of the Board of Governors, but could be invited to attend if they had a special interest in the subject of discussion.

Another problem that would arise would be the role of members of the committee who were not officials of a participant in the Special Drawing Account if the subject to be discussed was a matter pertaining exclusively to the Special Drawing Account. The general principle of the amendments is that governors for nonparticipants and executive directors not appointed or elected by at least one participant may attend and speak at meetings of the Board of Governors or Executive Directors, respectively, but are not entitled to vote on matters pertaining exclusively to the Special Drawing Account (see Article XXVII (a)). It would be necessary to decide the role of the officials that have been referred to when the committee was called upon to advise on a matter pertaining exclusively to the Special Drawing Account.

It has been the uniform practice for the Managing Director and such members of the staff as he may indicate to attend all meetings of committees of the Board of Governors.

4. Committee Action

It has not been the practice for committees of the Board of Governors to vote on the topics discussed by them. Committee reports have expressed the views of individual governors as well as any consensus reached and embodied in a recommendation. However, there is nothing in the Articles or in the By-Laws on Board of Governors committees. Rule C-11 of the Rules and Regulations declares that

There shall be no formal voting in committees and subcommittees. The Chairman of the committee or subcommittee shall determine the sense of the meeting (including alternative points of view) which shall be reported.

This is drafted in general language, but its inclusion and place in the Rules and Regulations indicate that it refers to committees and subcommittees of the Executive Directors only. The Board of Governors has followed a similar practice, but in the case of the Interpretation Committee there will be explicit authority for voting in the amendments. It follows from the normal rule that committees do not take decisions that the role of the committee now under discussion would be advisory. The reports of an advisory committee could include any diversity of views and show which members composed the majority and which the minority if there was no consensus.

In connection with the foregoing it may be useful to deal with the question whether members of a committee would have a “representative” capacity. They would not have that capacity in the sense that they would bind any member or members by the expression of their views or by joining in a recommendation. If there were to be some procedure by which a member of the Committee was selected by several member countries, he would represent them not in the legal sense that he was their mandatory but in the sense that he was thought by them to be likely to reflect their general viewpoint. It would be left to him to decide whether and how to ascertain their views on a particular question and whether he would express their views in the deliberations of the committee.

III. Procedural Aspects

The main topics to be considered in establishing an advisory committee can be grouped under three headings: (1) composition, (2) operating procedures, and (3) terms of reference. This section of the paper deals with (1) and (2). In determining any aspect of the committee under these headings, there is a choice among many possibilities. Not all of these can be set forth here, and those that are mentioned are illustrative only.

It is assumed that if an advisory committee were established, it would be done either by amendment of the By-Laws or by a Resolution of the Board of Governors.

(a) Size

Several principles would appear to have a bearing on the selection of an appropriate number of persons to serve on an advisory committee. The group should be small enough to be able to hold meetings informally and at short notice and, if possible, without undue public attention. At the same time, the number should be large enough so as to reflect the broad interests of Fund membership, geographic as well as economic and financial. It would be possible to start with a number considered ideal and then to make an allocation on the basis of these principles, or it would be possible to start with the principles and see what number one arrived at. Alternatively, it would be possible simply to match the number of executive directors on the ground that this was the number already considered by the Board of Governors satisfactory for the purposes of the Fund because the Board has increased the number of executive directors step by step from the original twelve. The size of the committee referred to here relates to member countries. If it were decided that each country should be represented by more than one official, the membership of the committee would be increased correspondingly.

(b) Selection

There are many criteria, operating singly or in combination, by which membership of a committee could be determined. Geographic areas, size of quotas, and use of member currencies in Fund operations are criteria that affect the composition of the Executive Directors. These criteria play a part in the separate election of executive directors by the American Republics that do not appoint executive directors (Article XII, Section 3(b) (iii)); the appointment of executive directors by the five members with the largest quotas (Article XII, Section 3(b) (i)); and additional appointed directors (Article XII, Section 3(c)). The criteria, if applied to a committee, would not have to operate in the same way as they do in connection with the composition of the Executive Directors. For example, the criterion of size of quota could be made to apply by grouping all quotas into categories by size.

If the composition of the Executive Directors were followed, the membership of a committee could duplicate the countries of executive directors. Alternatively, each seat on the Executive Directors could be regarded as a constituency, and the member country or countries composing the constituency could designate the persons to sit on the committee. If more than one person were to sit, either as principals or alternates, they could be from the same member country or from different member countries within the constituency.

If the criterion for selecting the committee were not self-executing, but involved some principle of choice, authority to make the choice could be exercised by the Managing Director or the Chairman of the Board of Governors or by both acting jointly or by the Board of Governors on the nomination of the Executive Directors. For example, any one of these could select a country from each group determined by geography or size of quota, or in some other way. Alternatively, all those constituting a group could select one of their number in some manner which they regarded as satisfactory.

(c) Membership

As already indicated, the members of a committee could be appointed as governors, but, alternatively, they could be appointed in some other official capacity or even in their personal capacity. It has been indicated also that if they were appointed in some official capacity other than that of governors of the Fund, they might be ministers of finance or central bank governors. Another possibility would be to select member countries, and permit each of them to designate the person or persons to participate in meetings generally or in particular meetings. There would have to be appropriate provisions with respect to alternates or temporary alternates if it was decided that they were not precluded.

(d) Term of appointment

If the analogy of the election of Executive Directors were followed, the term of appointment to a committee would be two years. If more frequent rotation was considered desirable, the term could be one year. Designations could be made at the time of an Annual Meeting of the Board of Governors, but this would not be essential.

(e) Chairman

The chairman of the committee could be chosen by the committee itself, or he could be selected by the Chairman of the Board of Governors or in some other way, or he could be the Chairman of the Board of Governors. The term of the office would have to be determined.

(f) Frequency of meetings

Meetings could be held at fixed periods or on call or by some combination of the two. The procedure for calling meetings could be affected by the terms of reference of the committee, and this topic is considered further under that heading below.

(g) Other procedural problems

As in the case of all committees, it would be necessary to consider a number of procedural questions, among which the place of meetings, quorum, agenda, minutes, and expenses can be listed. There is little point in pursuing these or related aspects at this time. It should be noted that it has been assumed that an advisory committee would be a standing committee. It is not inconceivable that a committee could be called into being when the occasion demanded, but under a By-Law previously adopted. It is also possible to conceive of different advisory committees for different purposes. An obvious basis for distinction could be issues relating exclusively to the Special Drawing Account and all other issues.

IV. Terms of Reference

A committee established to advise the Board of Governors would report to the Board of Governors whenever it had completed its consideration of some topic. There are two basically different approaches to the terms of reference of a committee. The first would be to attempt a definition of the terms of reference, with more or less detail; the second would be to avoid definition altogether but instead rely on a procedure for remitting topics to the committee. It is also possible to conceive of a combination of the two approaches.

Under the first course, i.e., the definition of the terms of reference, the minimum would appear to be some or all of the matters reserved to the Board of Governors. It is normal practice for the Executive Directors to make a recommendation to the Board of Governors on the exercise of any of these reserved powers, and it could be provided, therefore, that the Executive Directors would recommend whether their substantive recommendation should be considered by the committee. The Board of Governors could decide in its By-Law that the committee should be convened when the Executive Directors so recommended. This would obviate any embarrassment that might be involved in convening a committee of the Board of Governors by a decision of the Executive Directors.

Under Article XII, Section 2(b), as amended, and under Article XXVII (a)(i), the powers of the Board of Governors that may not be delegated to the Executive Directors are powers to

  • (i) Admit new members and determine the conditions of their admission.

  • (ii) Approve a revision of quotas, or to decide on the payment or on the mitigation of the effects of payment, of increases in quotas proposed as the result of a general review of quotas.

  • (iii) Approve a uniform change in the par values of the currencies of all members, or to decide when such a change is made that the provisions relating to the maintenance of gold value of the Fund’s assets shall not apply.

  • (iv) Make arrangements to cooperate with other international organizations (other than informal arrangements of a temporary or administrative character).

  • (v) Determine the distribution of the net income of the Fund.

  • (vi) Require a member to withdraw.

  • (vii) Decide to liquidate the Fund.

  • (viii) Decide appeals from interpretations of the Articles given by the Executive Directors.

  • (ix) Revise the provisions on repurchase or revise and supplement the rules for the distribution of repurchases among types of reserves.

  • (x) Make transfers to general reserve from any special reserve.

  • (xi) Prescribe other holders of special drawing rights and terms and conditions under Article XXIII, Section 3.

  • (xii) Allocate or cancel special drawing rights, determine the rates, and basic periods under Article XXIV, Section 2(a), (b), and (c).

  • (xiii) Change decisions because of unexpected major developments under Article XXIV, Section 3.

  • (xiv) Prescribe additional transactions or categories of transactions in which special drawing rights may be used by agreement under Article XXV, Section 2(b)(ii).

  • (xv) Adopt, modify, or abrogate rules for reconstitution under Article XXV, Section 6(b).

  • (xvi) Liquidate the Special Drawing Account under Article XXXI (a).

Presumably, item (viii) would not be within the province of any advisory committee because of the establishment of the Interpretation Committee under Article XVIII (b). The further definition of terms of reference could be in broad terms. It could refer to issues of importance affecting the international monetary system. It would be necessary to provide some procedure by which to settle whether a question met this test. This could be decided by the Executive Directors.

The last suggestion leads to consideration of a purely procedural determination of the questions that would be considered by a committee. Three initiatives could be considered: the Executive Directors, some minimum number of members, and the Board of Governors. A question could be remitted to the committee without defined terms of reference whenever the Executive Directors made a recommendation that the question should be considered by the committee. They might make that recommendation whether or not they were making a recommendation to the Board of Governors on the substance of some issue. In addition, by analogy to Article XII, Section 2(c), a question could go to the committee if that were requested by a specified number of members or by members having a specified proportion of the total voting power. If an issue were to arise in the Board of Governors, for example on the introduction of a proposed resolution, it could be remitted to the committee, which could then recommend the form in which the issue could go to the Executive Directors for study and recommendation, or could advise on some other course that it thought appropriate. The decision by the Board of Governors to remit to the committee an issue that arose in this way could be taken ad hoc or it could be remitted under some standard procedure incorporated in a By-Law.

(B) A Special Committee of the Board of Governors Outline of an Illustrative Plan with Variant Provisions Supplement 1

March 7, 1972)

This memorandum repeats the outline of the illustrative plan for a committee of the Board of Governors, together with summaries in context of the variant provisions that have been advanced at the two seminars of the Executive Directors on this matter. The first paragraph under each heading is quoted from the paper of January 1972; the numbered paragraphs are variants that have been suggested.

Some participants in the discussion thought that the word “advisory” could be misleading in describing the work of the committee, and the words “executive” and “steering” were suggested. For the time being the word “special” can be employed instead of “advisory.”

(a) Membership

The member or members that had appointed or elected an executive director would be regarded as a constituency. Each constituency would appoint two ministers having primary financial responsibilities of governors of central banks (referred to herein as principals) of a member or members in the constituency. The two principals need not come from the same member. Each principal would appoint a deputy, but the two principals could make a joint appointment of a single deputy. A deputy need not come from the same member as the principals. There could be provision also for the appointment of a temporary deputy who would be able to attend a meeting of the committee in the absence of the deputy.

  • (1) Each constituency would select a single person to serve on the committee, whether a minister or a governor, to be assisted by an alternate and a deputy. This provision would result in a committee of 21, including the Managing Director, with alternates and deputies (or deputies for principals and for alternates).

  • (2) As in (1), but without deputies.

  • (3) As in (1) or (2), but the committee would be limited to ministers with financial responsibilities. A committee of ministerial rank would be most appropriate for the consideration of issues that were political in nature or had become political because of an impasse.

  • (4) An alternative to the committee would be the election of nonresident executive directors.

  • (5) The committee would be composed of a small number of persons designated by five categories of countries.

(b) Mode of appointment

The members of the committee would be appointed before the conclusion of the Annual Meeting of the Board of Governors in each year in which the regular elections of executive directors take place. The governors for the Fund in each constituency would agree on the appointments. The governor with the largest quota in a constituency would inform the Secretary of the Fund of the appointments to the committee.

  • (1) No other approaches were suggested.

(c) Term

The members of the committee appointed under (a) would serve for the period of the two years between regular elections of executive directors. A special procedure could be adopted for the first committee if it were to be appointed before the 1972 Annual Meeting. The successor in office of a principal would complete the term of his predecessor.

  • (1) No other approaches were suggested.

(d) The level of meetings

The committee would meet either at the level of principals or at the level of deputies. In the absence of a principal, his deputy would be able to act for him.

  • (1) Under (a)(2) above, there would be only one level. The Executive Directors would be responsible for the preparation of studies and conduct the preliminary exchange of views to facilitate the work of the committee.

  • (2) A small steering committee would be established.

(e) Chairmen

The principals and deputies would meet before the end of the Annual Meeting of the Board of Governors at which they were appointed and each group would select its chairman. Chairmen would hold office for the full period, unless the committee prescribed some shorter period.

  • (1) A nonpolitical chairman, such as the Managing Director, would be designated ex officio.

  • (2) The Chairman of the Board of Governors would be the chairman of the committee and would call meetings and establish agendas in consultation with the Managing Director.

(f) Managing Director

The Managing Director would be a member of the committee as a principal. He would appoint members of the staff of the Fund to attend meetings as his deputies.

  • (1) No other approaches were suggested.

(g) Meetings

The committee would be convoked at the level of principals or deputies by the appropriate chairman. The committee would meet, either as principals or deputies, at least once a year between Annual Meetings of the Board of Governors, and at such other times as the chairman thought desirable after consulting principals or deputies as the case might be. Meetings would be held at the headquarters of the Fund or at such other place as the chairman determined after consulting principals or deputies as the case might be.

  • (1) Under (a)(2) above, the committee would not meet at the level of deputies.

(h) Meetings of deputies and executive directors

Meetings of the deputies and executive directors of the Fund would be held for any purpose within (m) below by agreement between the chairman of the deputies and the Managing Director.

  • (1) Under (a)(2) above, there would be alternates but not deputies, and it was not contemplated that the committee would meet at the level of alternates as such. Alternates, however, would be able to substitute for their principals in the normal manner.

(i) Attendance

The quorum for a meeting of principals or deputies would be a majority of the committee. The committee would be able to determine the number of advisors that each member of the committee could bring to meetings. The committee would be able to invite persons other than principals or deputies to participate in its meetings.

  • (1) No other approaches were suggested.

(j) Procedures and administration

The committee would establish its own working procedures. The staff of the Fund would provide services to the committee.

  • (1) See (d)(1) above, second sentence.

(k) Reports

Any recommendations or views of the committee would be adopted by the sense of the meeting, but minority views would be recorded and reported. Any reports of the principals, including recommendations or views, would be made to the Board of Governors, and would be available to the Executive Directors. Reports of the deputies, including recommendations or views, would be made to the principals, and would be available to the Executive Directors.

  • (1) Questions connected with the way in which the committee would arrive at its views and make its reports were raised and are considered in a separate memorandum.

  • (2) See (d)(1) above, second sentence.

(l) Establishment

The Board of Governors would establish the committee by a resolution which included the main elements in broad outline. The full “charter” of the committee would be set forth in a By-Law of the Board of Governors.

  • (1) A committee would be established only on an ad hoc basis when important issues such as amendments to the Articles of Agreement or the resolution of a monetary crisis had to be dealt with at the political level.

  • (2) Separate committees would be constituted ad hoc to consider different subjects.

  • (3) A standing committee would be constituted but would meet only in the circumstances described in (1) above.

  • (4) A committee would be constituted now to consider the issues of reform of the monetary system.

  • (5) As in (4), but the committee would be transformed into a standing committee at a later date if experience justified this course.

  • (6) The Articles of Agreement would be amended to permit the formal establishment of the committee as an organ of the Fund.

(m) Terms of reference

The mandatory meeting between Annual Meetings of the Board of Governors would be held to review international monetary developments. The committee could be convoked on other occasions to advise the Board of Governors on any question within the reserved powers of the Board of Governors, or on any other question if it affected the international monetary system as a whole. The chairman, after consulting principals or deputies as the case might be, would determine whether a meeting should be held to consider a question.

  • (1) The committee would consider only the present issues of reform of the monetary system.

  • (2) A committee or committees would consider specific subjects, such as the consolidation of reserve assets.

  • (3) The standing committee would consider amendments to the Articles of Agreement.

  • (4) The standing committee would be prepared to act quickly to help resolve monetary crises.

  • (5) The standing committee would be able to determine its own terms of reference to some extent.

  • (6) The committee would be able to consider issues that were additional to those in the monetary field, such as trade barriers and voluntary restraints on exports, burden sharing in aid to developing countries, and military defense. No present body had such terms of reference, and there was a need for it as a prerequisite to negotiations on monetary reform.

  • (7) The committee would not have a broad mandate to consider any question affecting the monetary system but would consider specific questions referred to it by the Executive Directors because they had not been able to reach agreement on the questions.

  • (8) The committee would initiate a report to a member under Article XII, Section 8 when the adjustment process required it.

(C) A Special Committee of the Board of Governors Outline of an Illustrative Plan with Revised Variant Provisions Supplement 2

(March 31, 1972)

This memorandum repeats the outline of the illustrative plan for a special committee of the Board of Governors, together with summaries in context of variant provisions based upon the discussion of the outline and Supplement 1 in four seminars of the Executive Directors. The first paragraph under each heading is quoted from the paper of January 1972; the numbered paragraphs are variants that have been suggested.

(a) Membership

The member or members that had appointed or elected an executive director would be regarded as a constituency. Each constituency would appoint two ministers having primary financial responsibilities or governors of central banks (referred to herein as principals) of a member or members in the constituency. The two principals need not come from the same member. Each principal would appoint a deputy, but the two principals could make a joint appointment of a single deputy. A deputy need not come from the same member as the principals. There could be provision also for the appointment of a temporary deputy who would be able to attend a meeting of the committee in the absence of the deputy.

  • principals

  • (1) Each constituency would select a single principal to serve on the committee, whether a minister or a governor of a central bank.

  • (2) The constituencies that had appointed executive directors would each appoint a single principal, and the others would each appoint two.

  • (3) As in (1), but the selection of principals would be limited to ministers with financial responsibilities.

  • (4) The selection of principals would be limited to governors of the Fund.

  • alternates and deputies

  • (5) Each principal would appoint an alternate as well as a deputy.

  • (6) Executive directors could be designated as deputies.

  • (7) Each principal would appoint an alternate but not a deputy.

(b) Mode of appointment

The members of the committee would be appointed before the conclusion of the Annual Meeting of the Board of Governors in each year in which the regular elections of executive directors take place. The governors for the Fund in each constituency would agree on the appointments. The governor with the largest quota in a constituency would inform the Secretary of the Fund of the appointments to the committee.

  • (1) No other approaches were suggested, but it was proposed that the committee should be appointed as soon as possible.

(c) Term

The members of the committee appointed under (a) would serve for the period of the two years between regular elections of executive directors. A special procedure could be adopted for the first committee if it were to be appointed before the 1972 Annual Meeting. The successor in office of a principal would complete the term of his predecessor.

  • (1) No other approaches were suggested.

(d) The level of meetings

The committee would meet either at the level of principals or at the level of deputies. In the absence of a principal, his deputy would be able to act for him.

  • (1) Under (a)(7) above, there would be only one level. The Executive Directors would be responsible for the preparation of studies and conduct the preliminary exchange of views to facilitate the work of the committee, without prejudice to the right of principals to introduce proposals and papers in the committee.

(e) Chairmen

The principals and deputies would meet before the end of the Annual Meeting of the Board of Governors at which they were appointed and each group would select its chairman. Chairmen would hold office for the full period, unless the committee prescribed some shorter period.

  • (1) A nonpolitical chairman, such as the Managing Director, would be designated ex officio.

(f) Managing Director

The Managing Director would be a member of the committee as a principal. He would appoint members of the staff of the Fund to attend meetings as his deputies.

  • (1) The Deputy Managing Director would be designated as the Managing Director’s alternate.

(g) Meetings

The committee would be convoked at the level of principals or deputies by the appropriate chairman. The committee would meet, either as principals or deputies, at least once a year between Annual Meetings of the Board of Governors, and at such other times as the chairman thought desirable after consulting principals or deputies as the case might be. Meetings would be held at the headquarters of the Fund or at such other place as the chairman determined after consulting principals or deputies as the case might be.

  • (1) Under (a)(7) above, the committee would not meet at the level of deputies.

  • (2) The committee would decide upon the circumstances in which it should meet.

(h) Meetings of deputies and executive directors

Meetings of the deputies and executive directors of the Fund would be held for any purpose within (m) below by agreement between the chairman of the deputies and the Managing Director.

  • (1) Under (a)(7) above, there would be alternates but not deputies, and the committee would not meet at the level of alternates as such.

  • (2) Meetings of the deputies and executive directors would be limited to the preparation of agenda for meetings of the principals.

(i) Attendance

The quorum for a meeting of principals or deputies would be a majority of the committee. The committee would be able to determine the number of advisors that each member of the committee could bring to meetings. The committee would be able to invite persons other than principals or deputies to participate in its meetings.

  • (1) Advisors could be specialists in other than monetary matters.

(j) Procedures and administration

The committee would establish its own working procedures. The staff of the Fund would provide services to the committee.

  • (1) The services of the staff would be made available under the general supervision of the Executive Directors.

  • (2) The committee would be able to invite experts to give advice, or co-opt persons not covered by (a) above, or collaborate with other groups or organizations and their staffs.

(k) Reports

Any recommendations or views of the committee would be adopted by the sense of the meeting, but minority views would be recorded and reported. Any reports of the principals, including recommendations or views, would be made to the Board of Governors, and would be available to the Executive Directors. Reports of the deputies, including recommendations or views, would be made to the principals, and would be available to the Executive Directors.

  • (1) Weighted voting could be recognized in some form in connection with recommendations or views.

(l) Establishment

The Board of Governors would establish the committee by a resolution which included the main elements in broad outline. The full “charter” of the committee would be set forth in a By-Law of the Board of Governors.

  • (1) A committee would be established only on an ad hoc basis to consider proposed amendments to the Articles of Agreement.

  • (2) A committee would be constituted now to consider the issues of reform of the monetary system.

  • (3) As in (2), but the committee could be transformed into a standing committee at a later date if experience justified this course.

  • (4) As in (2), but the Articles of Agreement could be amended to permit the formal establishment of the committee as an organ of the Fund if experience justified this course.

(m) Terms of reference

The mandatory meeting between Annual Meetings of the Board of Governors would be held to review international monetary developments. The committee could be convoked on other occasions to advise the Board of Governors on any question within the reserved powers of the Board of Governors, or on any other question if it affected the international monetary system as a whole. The chairman, after consulting principals or deputies as the case might be, would determine whether a meeting should be held to consider a question.

  • (1) The committee would consider only the present issues of reform of the monetary system.

  • (2) The committee would consider proposed amendments to the Articles of Agreement.

  • (3) The committee would have a general mandate which would enable it to determine its own terms of reference for practical purposes.

  • (4) The committee would be able to consider issues associated with those of a monetary character, such as trade policies.

  • (5) The committee would not have a broad mandate to consider any question affecting the monetary system but would consider specific questions referred to it by the Executive Directors because they had not been able to reach agreement on the questions.

No official report of the proceedings was issued, but the Temporary Secretary prepared a compilation entitled Selected Documents, Board of Governors’ Inaugural Meetings.

International Monetary Fund, Summary Proceedings of the Twenty-Third Annual Meeting of the Board of Governors, September 30-October 4, 1968 (Washington, 1969), pp. 285-86.

International Monetary Fund, Summary Proceedings of the Eleventh Annual Meeting of the Board of Governors, September 1956 (Washington, 1956) pp. 33, 34, and 46.

International Monetary Fund, Summary Proceedings of the Twelfth Annual Meeting of the Board of Governors, September 1957 (Washington, 1957), p. 21.

The Rules and Regulations are reproduced below, pp. 457-81; at p. 460.

See above, pp. 129-31.

See above, pp. 129-31.

See above, pp. 142-45.

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