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IMF History (1972-1978) Volume 3
Chapter

Selected Communiqués of the Group of Ten

Author(s):
International Monetary Fund
Published Date:
February 1996
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Reproduced below are four of the communiqués issued by the Group of Ten, the ten countries participating in the General Arrangements to Borrow, in the years 1972 through 1978 that contain passages of particular relevance to the history of the Fund for those years.

March 9, 1973

1. The Ministers and Central Bank Governors of the ten countries participating in the General Arrangements to Borrow and the member countries of the European Economic Community1 met in Paris on March 9, 1973, under the Chairmanship of Mr. Valery Giscard d’Estaing, the Minister of the Economy and Finance of France. Mr. P.-P. Schweitzer, Managing Director of the International Monetary Fund, took part in the meeting, which was also attended by Mr. Nello Celio, Head of the Federal Department of Finance of the Swiss Confederation, Mr. E. Stopper, President of the Swiss National Bank, Mr. Francois-Xavier Ortoli, President of the Commission of the European Economic Community, Mr. E. van Lennep, Secretary-General of the Organization for Economic Cooperation and Development and Mr. René Larre, General Manager of the Bank for International Settlements.

Mr. Ali Wardhana, President of the Committee of Twenty of the International Monetary Fund was specially invited to participate in this meeting.

2. They examined the international monetary situation in the light of the present crisis and had a broad exchange of views both on the origins of the crisis and on ways of dealing with it in a spirit of cooperation.

3. They agreed that the crisis was due to speculative movements of funds. They also agreed that the existing relationships between parities and central rates, following the recent realignment, correspond, in their view, to the economic requirements and that these relationships will make an effective monetary contribution to a better balance of international payments. In these circumstances they unanimously expressed their determination to ensure jointly an orderly exchange rate system.

4. The Ministers and Governors are agreed that, for this purpose, a set of measures needs to be drawn up.

5. As to the procedure, the Ministers and Governors considered that the formulation of these measures required a technical study which they have instructed their Deputies to undertake forthwith.

6. The Ministers and Governors have decided to meet again on Friday, March 16, to draw joint conclusions on the basis of this study and take the decisions which are called for, so as to make it possible for the eec countries and Sweden to reopen their exchange markets on Monday, March 19.

7. Finally the Ministers and Governors considered that the recent disturbances underline the urgent need for an effective reform of the international monetary system. They decided to take the necessary steps to accelerate the work of the Committee of Twenty of the International Monetary Fund.

March 16, 1973

1. The Ministers and Central Bank Governors of the ten countries participating in the General Arrangements to Borrow and the member countries of the European Economic Community1 met in Paris on March 16, 1973 under the chairmanship of Mr. Valery Giscard d’Estaing, Minister of the Economy and of Finance of France. Mr. P.-P. Schweitzer, Managing Director of the International Monetary Fund, took part in the meeting, which was also attended by Mr. Nello Celio, head of the Federal Department of Finance of the Swiss Confederation, Mr. E. Stopper, President of the Swiss National Bank, Mr. W. Haferkamp, Vice-President of the Commission of the European Economic Community, Mr. E. van Lennep, Secretary-General of the Organization for Economic Cooperation and Development, Mr. René Larre, General Manager of the Bank for International Settlements, and Mr. Jeremy Morse, Chairman of the Deputies of the Committee of Twenty of the imf.

2. The Ministers and Governors heard a report by the Chairman of their Deputies, Mr. Rinaldo Ossola, on the results of the technical study which the Deputies have carried out in accordance with the instructions given to them.

3. The Ministers and Governors took note of the decisions of the members of the eec announced on Monday. Six members of the eec and certain other European countries, including Sweden, will maintain two and one quarter per cent margins between their currencies. The currencies of certain countries, such as Italy, the United Kingdom, Ireland, Japan, and Canada remain, for the time being, floating. However, Italy, the United Kingdom, and Ireland have expressed the intention of associating themselves as soon as possible with the decision to maintain eec exchange rates within margins of two and one quarter per cent and meanwhile of remaining in consultation with their eec partners.

4. The Ministers and Governors reiterated their determination to ensure jointly an orderly exchange rate system. To this end, they agreed on the basis for an operational approach towards the exchange markets in the near future and on certain further studies to be completed as a matter of urgency.

5. They agreed in principle that official intervention in exchange markets may be useful at appropriate times to facilitate the maintenance of orderly conditions, keeping in mind also the desirability of encouraging reflows of speculative movements of funds. Each nation stated that it will be prepared to intervene at its initiative in its own market, when necessary and desirable, acting in a flexible manner in the light of market conditions and in close consultation with the authorities of the nation whose currency may be bought or sold. The countries which have decided to maintain two and one quarter per cent margins between their currencies have made known their intention of concerting among themselves the application of these provisions. Such intervention will be financed, when necessary, through use of mutual credit facilities. To ensure fully adequate resources for such operations, it is envisaged that some of the existing “swap” facilities will be enlarged.

6. Some countries have announced additional measures to restrain capital inflows. The United States authorities emphasized that the phasing out of their controls on longer-term capital outflows by the end of 1974 was intended to coincide with strong improvement in the U.S. balance of payments position. Any steps taken during the interim period toward the elimination of these controls would take due account of exchange market conditions and the balance of payments trends. The U.S. authorities are also reviewing actions that may be appropriate to remove inhibitions on the inflow of capital into the United States. Countries in a strong payments position will review the possibility of removing or relaxing any restrictions on capital outflows, particularly long term.

7. Ministers and Governors noted the importance of dampening speculative capital movements. They stated their intention to seek more complete understanding of the sources and nature of the large capital flows which have recently taken place. With respect to Euro-currency markets, they agreed that methods of reducing the volatility of these markets will be studied intensively, taking into account the implications for the longer-run operation of the international monetary system. These studies will address themselves, among other factors, to limitations on placement of official reserves in that market by member nations of the imf and to the possible need for reserve requirements comparable to those in national banking markets. With respect to the former, the Ministers and Governors confirmed that their authorities would be prepared to take the lead by implementing certain undertakings that their own placements would be gradually and prudently withdrawn. The United States will review possible action to encourage a flow of Euro-currency funds to the United States as market conditions permit.

8. In the context of discussions of monetary reform, the Ministers and Governors agreed that proposals for funding or consolidation of official currency balances deserved thorough and urgent attention. This matter is already on the agenda of the Committee of Twenty of the imf.

9. Ministers and Governors reaffirmed their attachment to the basic principles which have governed international economic relations since the last war—the greatest possible freedom for international trade and investment and the avoidance of competitive changes of exchange rates. They stated their determination to continue to use the existing organizations of international economic cooperation to maintain these principles for the benefit of all their members.

10. Ministers and Governors expressed their unanimous conviction that international monetary stability rests, in the last analysis, on the success of national efforts to contain inflation. They are resolved to pursue fully appropriate policies to this end.

11. Ministers and Governors are confident that, taken together, these moves will launch an internationally responsible program for dealing with the speculative pressures that have recently emerged and for maintaining orderly international monetary arrangements, while the work of reform of the international monetary system is pressed ahead. They reiterated their concern that this work be expedited and brought to an early conclusion in the framework of the Committee of Twenty of the imf.

September 29, 1974

1. The Ministers and Central Bank Governors of the ten countries participating in the General Arrangements to Borrow met in Washington on September 29, 1974, under the chairmanship of Mr. Emilio Colombo, Minister of Finance of Italy. Mr. H. J. Witteveen, the Managing Director of the International Monetary Fund, took part in the meeting, which was also attended by the Vice-President of the Swiss National Bank, Mr. A. Hay, the Secretary-General of the Organization for Economic Cooperation and Development, Mr. E. van Lennep, the General Manager of the Bank for International Settlements, Mr. R. Larre, and the Vice-President of the Commission of the European Economic Community, Mr. W. Haferkamp.

2. The Ministers and Governors heard a report from the Chairman of their Deputies, Mr. Rinaldo Ossola, on the question of renewing the General Arrangements to Borrow. Under these Arrangements the participating countries can provide the imf with substantial amounts of supplementary resources and this means of reinforcing the Fund’s lending capacity could be of great value in the coming years. The Ministers and Governors have therefore agreed to the renewal of these Arrangements for a further period of five years from October 24, 1975, subject to some amendments which are needed to bring the operational provisions up to date. The Ministers and Governors have also proposed that the decision on this renewal, which is to be taken by the Board of Executive Directors of the imf before October 24, 1974, should provide for the immediate entry into force of the proposed amendments.

3. The Ministers and Governors agreed that their Deputies should continue to carry out their traditional mandate.

4. Mr. Masayoshi Ohira, Minister of Finance of Japan, was elected Chairman of the Group of ten for the following year.

December 19, 1975

1. The Ministers and Central Bank Governors of the ten countries participating in the General Arrangements to Borrow met in Paris on December 19, 1975 under the chairmanship of Mr. W. F. Duisenberg, Minister of Finance of the Netherlands.

The Managing Director of the International Monetary Fund, Mr. H. J. Witteveen, took part in the meeting, which was also attended by the President of the Swiss National Bank, Mr. F. Leutwiler, the Secretary-General of the oecd, Mr. E. van Lennep, the General Manager of the Bank for International Settlements, Mr. R. Larre, and Mr. U. Mosca, representing the President of the Commission of the European Communities, Mr. F.-X. Ortoli.

2. After hearing a report from the Chairman of their Deputies, Mr. R. Ossola, on the Deputies’ preparatory discussions, the Ministers and Governors agreed as follows:

Exchange Rate Regime

3. The Ministers and Governors examined the amendments to Article IV proposed by the United States and French Ministers. They agreed on these proposals which they will support at the Interim Committee Meeting in Jamaica. They noted the statement of the Managing Director of the imf that the Board of Executive Directors will examine these amendments in the coming week.

4. The Ministers and Governors discussed the United States-French proposals to intensify consultation procedures on exchange rate movements and underlying factors. They noted that their central banks were in the process of deepening and broadening their consultations and considered that these consultations will make an important contribution toward countering erratic fluctuations in exchange rates. They agreed that the organization of consultation procedures among Finance Ministers and their Deputies should be conducted on a pragmatic basis. They have also agreed to keep in close consultation with the Managing Director of the imf.

Arrangements Concerning Gold

5. The Ministers and Governors agreed on the need for simultaneity in the implementation of the various elements in the arrangements concerning gold referred to in paragraph 6 of the press communiqué of the meeting of the Interim Committee on August 31, 1975.

6. The amended Articles of Agreement should include a clause by which the members of the imf undertake to collaborate with the Fund and with other members in order to ensure that their policies with respect to reserve assets shall be consistent with the objectives of promoting better international surveillance of international liquidity and making the special drawing right the principal reserve asset in the international monetary system.

Relations with Developing Countries

7. The Ministers discussed questions related to the need of the members of the Fund, and in particular the developing countries, for additional access to the Fund’s resources. They agreed to consider these matters further before the meeting of the Interim Committee at Jamaica. In this connection the Ministers and Governors noted with satisfaction that the Executive Board of the imf had reached agreement on an important liberalization of the compensatory financing facility. They also confirmed their agreement on the urgent need to establish a trust fund for the benefit of the low-income countries.

[This communiqué was issued jointly by the Group of Ten and the European Economic Community.] The Group of Ten comprises six of the member countries of the European Economic Community (Belgium, France, Germany, Italy, the Netherlands and the United Kingdom), as well as four other countries (Canada, Japan, Sweden and the United States). The other three member countries of the EEC, Denmark, Ireland, and Luxembourg, also participated in this meeting.

[This communiqué was issued jointly by the Group of Ten and the European Economic Community.] The Group of Ten comprises six of the member countries of the European Economic Community (Belgium, France, Germany, Italy, the Netherlands, and the United Kingdom), as well as four other countries (Canada, Japan, Sweden, and the United States). The other three member countries of the EEC, Denmark, Ireland, and Luxembourg, also participated in this meeting.

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