Chapter

II Convertibility of Currencies for Current International Payments and Transfers

Author(s):
R. Johnston, and Mark Swinburne
Published Date:
September 1999
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Developments in the convertibility of members’ currencies for current payments and transfers over the period 1993–97 have clearly been toward more liberal exchange systems for payments and transfers for current international transactions. A measure of such a trend is the increasing number of IMF members that have accepted, since 1993, the obligations of the Article VIII, Sections 2, 3, and 4 of the Articles of Agreement, which provides for freedom of payments and transfers for current international transactions (see Figure 2).

Figure 2.Number of Countries That Have Accepted the Obligations of Article VIII, Sections 2, 3, and 4

(Cumulative as of October 31, 1998)

A member country normally accepts the obligations of Article VIII only after eliminating all exchange restrictions, as defined by the IMF’s Articles of Agreement. Although the concept of restriction under the IMF’s jurisdiction is narrower than the concept of exchange control, the acceptance of such obligations is usually an important part of broader liberalization.3 In addition, countries that have not formally accepted the obligations of Article VIII, Sections 2, 3, and 4 are more liberal today than some years ago, as they have continued to liberalize their exchange system by improving the functioning of their exchange and financial markets and by removing restrictions on capital movements (see Section III). The IMF has been active in promoting such liberalization, by exercising its jurisdiction, providing technical assistance and training, and exercising surveillance, and through the design of its adjustment programs.

The IMF’s Jurisdictional View of Exchange Restrictions

At the end of 1997, 131 countries, or about 70 percent of the membership, were free of restrictions on payments and transfers for current international transactions compared with 119 at the end of 1993. Fifty member countries maintained exchange restrictions compared with 60 countries at the end of 1993. Of these, 20 had accepted the obligations of Article VIII, Sections 2, 3, and 4; of the remainder that were availing themselves of the transitional arrangements of Article XIV, 25 maintained Article VIII restrictions (i.e., restrictions introduced after accession to the IMF), and 5 maintained only restrictions under Article XIV. Under the provisions of Article XIV, a member may maintain and adapt to changing circumstances the restrictions on payments and transfers for current international transactions that were in effect on the date on which it became a member; the IMF is required to make annual reports on these restrictions.

Eighty percent of the members maintaining restrictions under Article VIII did so without IMF approval (see Tables 1 and 2). The Articles of Agreement do not stipulate the conditions for approval by the IMF of exchange measures subject to Article VIII. The Executive Board, however, has adopted several decisions over time governing the approval of exchange restrictions. To be approved, restrictions have to be temporary, maintained for balance of payments reasons, and nondiscriminatory. Restrictions for reasons of national or international security are not objected to. While restrictions can be approved only if they are imposed for balance of payments reasons, multiple currency practices can be approved when they have been introduced for non-balance of payments reasons “provided that such practices do not materially impede the member’s balance of payments adjustment, do not harm the interests of others, and do not discriminate among members.”4

Table 1.IMF Members with Article XIV Status at the End of 19971
Number of

Years Under

Article XIV
Fund Quota

(in percent)
Without

Restrictions
Maintaining Restrictions
Under Article VIIIUnder

Article XIV
ApprovedUnapproved
Afghanistan, Islamic State of420.08XX
Albania60.02X
Angola80.14XX
Azerbaijan50.08XX
Belarus50.19XX
Bhutan160.00X
Bosnia and Herzegovina250.08X
Brazil321.49X
Bulgaria370.32X
Burundi340.04X
Cambodia280.04X
Cape Verde190.00X
Colombia520.39X
Congo, Dem. Rep. of the340.20X
Egypt520.47X
Eritrea50.01X
Ethiopia520.07XX
Iran, Islamic Republic of520.74X
Iraq4520.35
Lao People’s Dem. Rep.360.03X
Liberia350.05X
Libya390.56X
Macedonia, former Yugoslav Republic of350.03X
Maldives190.00X
Mauritania340.03X
Mozambique130.06X
Myanmar450.13X
Nigeria360.88X
Romania3250.52X
Rwanda3340.04X
São Tomé and Príncipe200.00XX
Somalia350.03X
Sudan400.12X
Syrian Arab Rep.500.14XX
Tajikistan40.04X
Turkmenistan50.03X
Uzbekistan50.14X
Vietnam410.17XX
Zambia320.25X

In some instances, restrictions or practices may have been removed subsequent to the cut-off date.

On December 14, 1992, Bosnia succeeded to the membership of the Socialist Federal Republic of Yugoslavia.

The country has subsequently accepted the obligations of Article VIII, Sections 2, 3, and 4.

No Article IV consultation has been held with Iraq since 1980.

In some instances, restrictions or practices may have been removed subsequent to the cut-off date.

On December 14, 1992, Bosnia succeeded to the membership of the Socialist Federal Republic of Yugoslavia.

The country has subsequently accepted the obligations of Article VIII, Sections 2, 3, and 4.

No Article IV consultation has been held with Iraq since 1980.

Table 2.Members with Article VIII Status Maintaining Exchange Restrictions or Practices Subject to Approval by the IMF1
1993199419951997
ApprovedUnapprovedApprovedUnapprovedApprovedUnapprovedApprovedUnapproved
Bangladesh2Dominican RepublicBangladesh2Dominican RepublicChile3Dominican RepublicBotswanaBelize
Guatemala4HaitiGuatemala4HaitiEcuador5HondurasGuinea6Dominican Republic
KenyaHonduras7KenyaHonduras7Guatemala8IndiaIndia9Honduras
MauritiusIndiaMauritiusIndiaKenyaMaltaJordan10India
NicaraguaMaltaNicaraguaMaltaMauritiusSeychellesKenyaMalta11
PakistanNicaraguaPakistan12SeychellesNicaragua13South Africa15Kyrgyz RepublicMongolia
SeychellesSouth AfricaPapua New Guinea14SurinamePhilippines16Seychelles
South AfricaSurinameTunisiaRussia17Suriname
SurinameTunisiaSierra LeoneThailand
TunisiaZimbabweTunisia
Ukraine18

In some instances, restrictions or practices may have been removed or newly introduced, and therefore, the table may not necessarily reflect the position as of end of the year. The following countries maintain optional bilateral payments agree menu that provide for settlement periods longer than three months: Argentina, Bolivia, Brazil. Chile, Colombia, Ecuador, Mexico, Paraguay. Peru. Uruguay, and Venezuela. Pending a forthcoming review of the jurisdictional aspect of such arrangements, the IMF does not object to the maintenance in existing official or clearing arrangements of settlement provisions that do not require the settlement of balances at least as frequently as every three months, if such provisions were in force before July 1, 1994.

Bangladesh was granted approval for two multiple currency practices until the end of September 1994; these practices ceased to exist as of September 1994.

Limitations on certain profit remittances were removed in August 1995.

Exchange restrictions evidenced by external payments arrears approved until March/June 1994.

Board approval of multiple currency practices (MCP) was given through June 30, 1995.

Arrears approved until January 31, 1998.

Honduras maintained a multiple currency practice and a restriction on the size of allowable bids in the foreign exchange auction, both subject to approval under Article VIII.

Arrears approved until mid-September 1995.

The MCP arising from exchange rate guarantees on nonresident deposits was approved until August 1997.

Arrears approved until the end of September 1997.

The MCP arising from a forward exchange rate guarantee scheme for U.K. and Irish tour operators was eliminated in November 1997.

Restrictions and MCP were approved until June 30, 1994.

The Executive Board of the IMF approved exchange restrictions on payments for invisibles until the end of February 1995, and restrictions on payments for private debts and an MCP until the end of June 1995.

Restriction approved until July 31, 1995.

Restrictions were eliminated on March 13, 1995 with the unification of the exchange rates by means of the abolition of the financial rand.

Restrictions arise from forward cover provided to oil importers. Approval expired along with contracts by March 1997.

At the time of accepting the obligations of Article VIII the authorities were dismantling one remaining restriction.

Restriction eliminated on May 31, 1997.

In some instances, restrictions or practices may have been removed or newly introduced, and therefore, the table may not necessarily reflect the position as of end of the year. The following countries maintain optional bilateral payments agree menu that provide for settlement periods longer than three months: Argentina, Bolivia, Brazil. Chile, Colombia, Ecuador, Mexico, Paraguay. Peru. Uruguay, and Venezuela. Pending a forthcoming review of the jurisdictional aspect of such arrangements, the IMF does not object to the maintenance in existing official or clearing arrangements of settlement provisions that do not require the settlement of balances at least as frequently as every three months, if such provisions were in force before July 1, 1994.

Bangladesh was granted approval for two multiple currency practices until the end of September 1994; these practices ceased to exist as of September 1994.

Limitations on certain profit remittances were removed in August 1995.

Exchange restrictions evidenced by external payments arrears approved until March/June 1994.

Board approval of multiple currency practices (MCP) was given through June 30, 1995.

Arrears approved until January 31, 1998.

Honduras maintained a multiple currency practice and a restriction on the size of allowable bids in the foreign exchange auction, both subject to approval under Article VIII.

Arrears approved until mid-September 1995.

The MCP arising from exchange rate guarantees on nonresident deposits was approved until August 1997.

Arrears approved until the end of September 1997.

The MCP arising from a forward exchange rate guarantee scheme for U.K. and Irish tour operators was eliminated in November 1997.

Restrictions and MCP were approved until June 30, 1994.

The Executive Board of the IMF approved exchange restrictions on payments for invisibles until the end of February 1995, and restrictions on payments for private debts and an MCP until the end of June 1995.

Restriction approved until July 31, 1995.

Restrictions were eliminated on March 13, 1995 with the unification of the exchange rates by means of the abolition of the financial rand.

Restrictions arise from forward cover provided to oil importers. Approval expired along with contracts by March 1997.

At the time of accepting the obligations of Article VIII the authorities were dismantling one remaining restriction.

Restriction eliminated on May 31, 1997.

Member countries availing themselves of the transitional arrangements under Article XIV numbered 39 at the end of 1997; 60 percent of which had been members for at least 20 years. In total, 31 of those members maintained restrictions, with 8 maintaining both Article VIII and Article XIV restrictions (Table 1). The restrictions consisted mainly of binding foreign exchange allowances for current invisible payments and transfers, and multiple currency practices (MCPs) mostly arising from the existence of exchange rate guarantees or forward exchange contracts. More extreme forms of restrictions, such as foreign exchange budgets, advance import deposits, bilateral payment arrangements (BPAs) with restrictive features, and restrictions evidenced by the existence of external payments arrears, were in place in very few countries (see Part III, Table A1).

In 1997, 20 Article VIII countries maintained exchange restrictions; of these, 11 maintained unapproved restrictions. This compared with 15 countries, of which 10 were maintaining unapproved restrictions, in 1993 (see Table 2). The restrictions maintained were predominantly MCPs (see Part III, Table A2). Most of the 18 countries with unapproved restrictions have maintained such unapproved restrictions for a number of years. These included restrictions and a multiple currency practice resulting from the operation of a foreign exchange auction in Honduras; temporary restrictions in India; and restrictions arising from the administrative allocation of foreign exchange for current payments and transfers and those evidenced by the existence of arrears in the Seychelles. In some other cases, the nature of the unapproved restrictions varied over the period (see Table 2).

Trends in Exchange Controls on Payments for Current Account Transactions and Current Transfers

Exchange controls on payments and transfers for current international transactions have followed a similar trend to restrictions subject to IMF jurisdiction and have been reduced during the period 1993–97 (Table 3). Following the trend of earlier years, the number of liberalization measures has generally continued to exceed the incidence of tightening of exchange controls, with a particularly marked reduction in controls on invisibles. The volume of external payments arrears after falling sharply in the early 1990s has fluctuated in recent years (Figure 3).

Table 3.Exchange Controls on Payments and Transfers for Current International Transactions
19931994199519961997
Number of controls1
On import payments404387377375368
On invisible transactions1,2171,1861,1411,0981,069
Memorandum items
Total external payment arrears2
(in billions of SDRs)58.4763.9553.0157.6858.51
Number of IMF member countries179180181181182
Source: International Monetary Fund, Annual Report on Exchange Arrangements and Exchange Restrictions (various years).

In compiling the table, “not available” data is treated by averaging two series: in one, data that is “not available” is treated as representing the existence of a control and in the other, data that is “not available” is treated as not representing the existence of a control.

It includes official and private arrears.

Source: International Monetary Fund, Annual Report on Exchange Arrangements and Exchange Restrictions (various years).

In compiling the table, “not available” data is treated by averaging two series: in one, data that is “not available” is treated as representing the existence of a control and in the other, data that is “not available” is treated as not representing the existence of a control.

It includes official and private arrears.

Figure 3.Exchange Measures on Current Account Transactions, 1985–97

(Number of measures)

Sources: IMF, Annual Report on Exchange Arrangements and Exchange Restrictions, various issues.

1These trends depict the number of measures taken, irrespective of their economic significance.

2During 1985–92, only import deposits are taken into account. During 1993–97, all controls on import payments are included.

As of the end of 1997, 107 countries reported some form of control over payments for imports. In most of these countries, documentation requirements for the release of foreign exchange were in effect, usually to limit capital flight. Those requirements normally consist of an obligation to open letters of credit, the pre-shipment inspection of the goods imported, a domiciliation requirement for the transactions related to the import, the need to present an import license, or prior approvals to make payments in excess of set limits. Import financing requirements were in effect in about a third of the countries with controls on import payments, and consisted mostly of regulations on the type of imports affected and amount and timing of advanced payments, but also included in a few cases advance import deposits requirements, and restrictions on the sources of funds. Only 35 countries (or less than 20 percent of the membership) had three or more controls on import payments, and the strictest form of control—that is, rationing of foreign exchange resources, mainly through foreign exchange budgets, was present in only 11 countries. The number of countries adopting quantitative import controls implemented through the exchange system remained about 10 percent of the membership during 1994–97. Most quantitative restrictions on imports are now in the form of trade restrictions.

Up to 1990, the liberalization of exchange controls on invisibles had been less extensive than that on controls on import payments. In most cases, controls were either in the form of quantitative limits on the amounts for specific transactions (such as travel) or in the provision of foreign exchange on a case-by-case basis. Controls on transfers of profits and dividends earned on foreign direct investments generally took the form of a maximum amount that could be transferred either as an annual percentage of the original investment or in the form of the phasing of transfers. Controls were intended, inter alia, to avoid capital transfers and to ensure that required tax payments were made.

During the 1990s, liberalization of controls on payments and transfers for current invisible transactions has been extensive and the number of controls has fallen significantly (Table 3 and Figure 3). By the end of 1997, only eight countries maintained strict controls on a broad range of invisible transactions, in the form of prior approval requirements or the existence of absolute quantitative limits, or both (Angola, Bhutan, Cape Verde, Myanmar, Somalia, Syrian Arab Republic, Turkmenistan, and Vietnam maintained 10 or more controls on invisible transactions). In these cases, the categories of payment more strictly controlled included remittances of foreign workers’ earnings, of profits, interest, and dividend payments; and transfers for the payment of medical expenses and study costs abroad. The elimination of controls on invisibles and current transfers often took place simultaneously with the opening of the capital account (e.g., in Botswana, Fiji, India, Israel, Jordan, Kenya, Namibia, Nepal, the Slovak Republic, South Africa, Zambia, and Zimbabwe), or as part of the completion of the liberalization of payments and transfers for current international transactions in the context of the acceptance of Article VIII, Sections 2, 3, and 4 obligations (e.g., in Bangladesh, Hungary, Malta, Pakistan, the Philippines, Poland, Sri Lanka, and Tunisia). One hundred and one countries (or 55 percent of the membership) retained some type of control on the payments for invisibles; however, in most of these countries, the controls took the form of bona fide tests to avoid the transfer of capital abroad rather than to restrict the current payment and transfer, that is, requests for foreign exchange are granted, if it can be documented that the payment is for a legitimate purpose and not for transferring capital abroad.

The total amount of external payments arrears remained around SDR 60 billion during 1993-97, with over 75 percent of the stock in 1997 accounted for by only nine countries: Angola, the Democratic Republic of the Congo, Côte d’Ivoire, the Kyrgyz Republic, Myanmar, Nicaragua, Nigeria, Sudan, and the Republic of Yemen (see Part III, Table A3). The number of countries reporting arrears at the end of 1997 was 54, of which only 21 had private arrears (Vietnam only in convertible currencies).

Coordinating Exchange and Trade Liberalization

Exchange liberalization tends to start prior to, or concurrently with, trade reform, and to proceed in parallel with, but completed earlier than, trade reform. This conclusion emerges from the review of the experience with exchange and trade liberalization in five countries—China, India, Korea, Mexico, and Russia (see Part II, Section V). These countries eliminated binding exchange controls and promoted the development of a market-based exchange system either in advance of, or in tandem with, the liberalization of trade barriers. Most restrictive exchange controls were decisively abolished first, while trade liberalization was generally implemented more gradually. It is quite often easier to start with the exchange system rather than trade reforms since exchange barriers are not specific to individual products, firms, or sectors, and such reforms often do not face the same resistance from powerful lobbies in protected sectors.

Exchange controls and particularly controls on capital movements are also found to represent an important nontariff barrier to international trade for developing countries, and thus, further exchange and capital control liberalization could stimulate trade. By reducing distortions and costs, the liberalization of exchange and capital controls enhances competition in traded goods and services, and allocative and productive efficiency. Exchange liberalization also lowers transaction costs through promoting the development of foreign exchange markets and modern international payment instruments. By reducing disequilibrium in the foreign exchange market, exchange liberalization can also reduce reliance on trade restrictions for balance of payments reasons.

Bilateralism and Regionalism

The IMF has long discouraged members from adopting bilateral and regional payments arrangements that involve discriminatory and restrictive features. In an early discussion, the Executive Board urged “the full collaboration of all its members to reduce and to eliminate as rapidly as practicable reliance on bilateralism.” The “persistence of bilateralism may impede the attainment and maintenance of convertibility,” thereby hampering the establishment of a multilateral payments system.5

In some cases, bilateral payment arrangements were adopted as transitional arrangements while foreign exchange markets and multilateral payments mechanisms were being developed. Such arrangements can interfere with the development of conventional payment instruments; delay the development of deeper and more efficient foreign exchange markets and participation in private payments systems; and expose central banks to credit and exchange rate risks. Bilateral and regional payment arrangements may also involve exchange restrictions subject to the Fund’s jurisdiction—the IMF has based this determination on the length of the settlement period of balances in the arrangement, with settlement periods longer than three months being treated as a restriction—or multiple currency practices. Pending a forthcoming review, the IMF does “not object to the maintenance in existing official or clearing arrangements of settlement provisions that do not require the settlement of balances at least as frequently as every three months, if such provisions were in force before July 1, 1994.”6

At the end of 1997, it is estimated that 96 members maintained 269 bilateral payment arrangements,7 of which 156 were operative. This represents an 18 percent reduction in the number of total agreements and of 27 percent in the number of operative agreements since the end of 1993. Only a very few countries maintained bilateral payments arrangements with restrictive features at the end of 1997: Islamic State of Afghanistan, Albania, Cape Verde, Egypt, India, Sudan, and the Syrian Arab Republic. About 20 percent of members (most are formerly centrally planned economies) maintained more than 10 agreements each; more than half the agreements were inoperative. The most common obstacle to the prompt elimination of bilateral payments arrangements has been the difficulties in reaching agreement between the parties on the clearing of the outstanding balances.

The number of members that are involved in regional payment agreements has also declined since 1990 following the collapse of the CMEA (see Table 4). As of December 1997, there were six regional arrangements that included a payments clearance agreement involving 61 countries. In a number of cases, member countries of the regional arrangements have made efforts to increase the use of the facilities, and most have succeeded in attracting new participants and expanding the coverage of the facility. In several cases, clearinghouse arrangements have been organized within major regional integration initiatives.

Table 4.Developments in Regional Payment Arrangements1

Figures in parentheses show the number of member countries.

Multilateral clearing system of the former Council for Mutual Economic Assistance.

European Payments Union.

Excluding Sterling Area other than the United Kingdom and Ireland.

Central American Clearing House/Central American Payments System.

Latin American Free Trade Association/Latin American Integration Association—Reciprocal Payments and Credits Agreement.

Regional Cooperation for Development/Economic Cooperation Organization.

Asian Clearing Union.

West African Clearing House/West African Monetary Agency.

Caribbean Multilateral Clearing Facility.

Clearing House of the Economic Community of the Great Lakes Countries.

Economic Community of the Central African States Clearing House.

Preferential Trading Area for Eastern and Southern Africa/Community of Eastern and Southern African States Clearing House.

These figures do not add to the sum of members in the arrangements, because some members participate in more than one arrangement, including Burundi, Rwanda, and the Democratic Republic of the Congo.

Figures in parentheses show the number of member countries.

Multilateral clearing system of the former Council for Mutual Economic Assistance.

European Payments Union.

Excluding Sterling Area other than the United Kingdom and Ireland.

Central American Clearing House/Central American Payments System.

Latin American Free Trade Association/Latin American Integration Association—Reciprocal Payments and Credits Agreement.

Regional Cooperation for Development/Economic Cooperation Organization.

Asian Clearing Union.

West African Clearing House/West African Monetary Agency.

Caribbean Multilateral Clearing Facility.

Clearing House of the Economic Community of the Great Lakes Countries.

Economic Community of the Central African States Clearing House.

Preferential Trading Area for Eastern and Southern Africa/Community of Eastern and Southern African States Clearing House.

These figures do not add to the sum of members in the arrangements, because some members participate in more than one arrangement, including Burundi, Rwanda, and the Democratic Republic of the Congo.

The main features of the regional payment arrangements in effect in December 1997 are presented in Part III, Table A4. The arrangements do not have features that give rise to a restriction subject to the IMF’s jurisdiction except for the Latin American Integration Association Reciprocal Payments and Credit Agreement (LAIA-RPCA), whose settlement period is four months. However, pending completion of a review of the jurisdictional aspects of official clearing and payments arrangements, the Executive Board decided in July 1994 that the IMF shall not object to the maintenance in those arrangements of longer settlement periods if such provisions were in force before July 1, 1994.

Procedures for Acceptance of Obligations of Article VIII, Sections 2, 3, and 4

In early 1993 and in recognition of the need to ensure further progress in developing the international monetary system, the IMF staff adopted enhanced procedures to encourage members to accept the obligations of Article VIII. As of January 1993 while only 75, or less than half of the members, had accepted the obligations of Article VIII, many other members maintained exchange systems that were either free of restrictions or had restrictions of minor significance. The guidelines thus requested the staff to discuss exchange restrictions maintained under Article XIV or subject to approval under Article VIII, and their elimination and the move toward acceptance of Article VIII status during Article IV consultations. The staff would point out the benefits associated with convertibility and press for the removal of exchange restrictions, paying due regard to the strength of the members’ balance of payments. In addition, staff reports would contain a brief description of the exchange system and the prospects for the elimination of outstanding restrictions and the acceptance of Article VIII, Sections 2, 3, and 4 obligations.

Although a member country may accept the obligations of Article VIII at any time, the IMF normally encourages doing so only after all restrictive measures have been eliminated, whether they are maintained under Article XIV or subject to approval under Article VIII.8 This is in line with the significance of the acceptance, that is, that the member is committed to maintaining an exchange system that is free of restrictions on payments and transfers for current international transactions. As part of the process of acceptance, the IMF staff undertakes an in-depth examination of the exchange system to identify any remaining impediments to the adoption of current account convertibility. Generally, these procedures have ensured that all outstanding exchange restrictions are identified and discussed with the member before Executive Board notification. Where restrictions were identified, the member in many cases elected to eliminate these before Executive Board notification; in other cases the member provided a timetable for the elimination of the restrictions so that staff could recommend approval for the retention of the restrictions as part of the notification to the Executive Board. Part III, Table A5 reviews the nature of restrictions maintained by members accepting the obligations of Article VIII, Sections 2, 3, and 4, and whether they were approved.

The intensified efforts by the IMF staff, the growing recognition that exchange restrictions are inefficient and largely ineffective in achieving their intended results, and the greater flexibility of exchange rate policies have encouraged members to eliminate exchange restrictions on current international payments and transfers and to accept the obligations of Article VIII, Sections 2, 3, and 4. Thus, between early 1993 and June 1998, 71 members had accepted these obligations. Nevertheless, a number have continued to avail themselves of the transitional arrangements, in some cases for periods up to 50 years, even in cases where they no longer maintain restrictions that are covered by the transitional arrangements (see Table 1). The list of countries maintaining Article XIV restrictions at the end of 1997, and the nature of these restrictions, is provided in Part III, Table A1. Under Article XIV, Section 3, the IMF could make representation to a member that conditions are favorable for the elimination of any restriction under Article XIV; however, it has never done so.

In contrast to a restriction, an exchange control may apply to any transaction in foreign exchange, either a receipt or a payment, or to the acquisition or holding of assets denominated in foreign currencies, and to transactions by nonresidents in the local market and by residents in foreign markets or by various monetary instruments.

Executive Board Decision No. 6790-(81/43), paragraph 4 in IMF (1997c) p. 442.

Executive Board Decision No. 433-(55/42), paragraph 3 in IMF (1997c) pp. 422-23.

Executive Board Decision No. 10749 (94/67) in IMF (1997c), pp. 423.

The number of agreements was estimated by adding all agreements reported for the 1998 AREAER by the authorities of at least one party to the agreement; in those cases where a member reported agreements with countries of the former Soviet Union, or other former multilateral clearing system of the former Council for Mutual Economic Assistance (CMEA), it was assumed that there were agreements with all those countries. In the case where one party reported the agreement as operative and the other party as inoperative, the agreement was classified as operative. As a result of the, methodology used, both the number of operative agreements and the number of total agreement may be overestimated.

Executive Board Decision No. 1034-(60/27) states that “members may at any time notify the Fund that they accept the obligations of Article VIII, Sections 2, 3, and 4, and no longer avail themselves of the transitional provisions of Article XIV. Before members give notice that they are accepting the obligations of Article VIII, Sections 2, 3, and 4, it would be desirable that, as far as possible, they eliminate measures that would require the approval of the Fund, and that they satisfy themselves that they are not likely to need recourse to such measures in the foreseeable future.”

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