IN many respects the past year was a highly satisfactory one for the world economy. World industrial production and, in particular, international trade—including the exports of the primary producing countries—were substantially higher than in the preceding year. However, within 1964 there was a slowing down of economic activity in several major countries, and the rate of increase in world trade was somewhat lower than during the preceding year, although still substantial. In the last quarter of the year, while there were signs of a moderate upturn in industrial activity, an exceptionally large imbalance in world payments, concentrated in the two main reserve centers, put more strain on the international monetary system than had been experienced for some time. For all these reasons, economic prospects at the end of the year appeared much more uncertain.
Article V, Section 3(a)(iii), states that a member shall be entitled to buy the currency of another member from the Fund if the proposed purchase “would not cause the Fund’s holdings of the purchasing member’s currency to increase by more than twenty-five per cent of its quota during the period of twelve months ending on the date of the purchase nor to exceed two hundred per cent of its quota, but the twenty-five per cent limitation shall apply only to the extent that the Fund’s holdings of the member’s currency have been brought above seventy-five per cent of its quota if they had been below that amount.”