Statement of Mr. Wahl, EBM/75/203, December 22, 1975, p. 17.
“[W]hen the legislature uses certain language in one part of the statute and different language in another, the court assumes that different meanings were intended.” N.J. Singer, Statutes and Statutory Construction, (6th Edition 2000), p. 194.
Sir Joseph Gold, Exchange Rates in International Law and Organization (American Bar Association, 1988), p. 113. As a general matter, the extensive writings of Sir Joseph Gold, former General Counsel of the Fund, provide an invaluable resource to any examination of the meaning of Article IV. Among other things, he was consulted on the preparation of the draft text of Article IV before it was presented to the Executive Board and, therefore, has some knowledge of the authors’ intentions that are not evident in the rather sparse legislative history of Article IV. Other publications of Sir Joseph Gold that are of relevance to this topic include Interpretation: The IMF and International Law (Kluwer Law International, 1996); Developments in the International Monetary System, the International Monetary Fund and the International Monetary Law Since 1971 (Martinus Nijhoff, 1983); Legal and Institutional Aspects of the International Monetary System: Selected Essays, Volume II (IMF, 1983); Legal Effects of Fluctuating Exchange Rates (IMF, 1990).
Implementation of The Second Amendment—Notification of Exchange Arrangements under Article IV, Section 2, SM/77/277, November 28, 1977, p. 2.
See Chairman’s Summing Up, Annual Review of the Implementation of Surveillance (EBM/82/44), April 9, 1982, p. 13.
Notification of Exchange Arrangements under Article IV, Section 2, Decision No. 5712-(78/41), adopted March 23, 1978.
Although the legislative history of Article IV is not extensive, there was also some analysis of this issue when the draft provision was discussed in the Executive Board. In particular, the then General Counsel noted that “the freedom of members to choose was protected although, of course, they remained subject to the obligations of Article IV, Section 1.” See EBM/75/206, December 23, 1975, p. 15. See also, Surveillance over Exchange Rate Policies; Legal Aspects of the Discussion of SM/77/33, SM/77/59, March 21, 1977, p. 1.
Article VI, Section 3.
Under the 1977 Decision, one of the “developments” that “might indicate the need for discussion with a member” regarding the observance of the principle relating to exchange rate manipulation includes the introduction of or substantial modification for balance of payments purposes of restrictions on, or incentives for, the inflow or outflow of capital. See also, statements by the General Counsel during the 1977 Executive Board discussions of the 1977 Decision in which he clarified that the imposition of capital controls or the capital flows that could occur in the absence of such controls could be legally used as an indicator justifying a need for discussion between the Fund and the member of the appropriateness of the member’s exchange policies. The General Counsel reasoned that as with other provisions of the Articles, the members’ freedom in terms of capital controls was circumscribed by the member’s obligations under Article IV. EBM/77/9, January 17, 1977, p. 10; EBM/77/10, January 19, 1977, pp. 7, 9, and 17. See also EBM/77/10, January 19, 1977, pp. 16–18 for the discussion of the same issue during the Board discussions of the 1977 discussions.
Sir Joseph Gold, Exchange Rates in International Law and Organization (American Bar Association, 1988), p. 104.
“A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous”; Norman J. Singer, Statutes and Statutory Construction, at pp. 185–86. Moreover, as is noted by Sir Joseph Gold, former General Counsel of the Fund, such an interpretation of “in particular” is also supported by the interpretation that has been given to the term in other provisions of the Articles; See Exchange Rates in International Law and Organization, at p. 104.
As noted by Sir Joseph Gold, it was recognized that, if members did not adhere to recommendations, the Fund could revisit the issue and determine whether a firmer approach was needed. “Although provisions imposing obligations to collaborate are expressed in mandatory terms, the IMF has assumed that the exacting administration authorized by such a provision permits a less rigorous approach, without any sacrifice of authority should firmer administration of it become advisable”; Interpretation: The IMF and International Law, at p. 337.
The expansion of the obligation to collaborate to includes collaboration among members may have been inspired by certain arrangements that existed at the time of the Second Amendment, such as the “snake” and the practice of pegging to certain leading currencies. The “snake” was an arrangement between several European countries by which each participant maintained a fixed relationship between its currency and the currency of other participants, with narrow margins for transactions involving these currencies.
The reference to “exchange stability” in the purposes of the Fund under Article I was left intact out of a reluctance on the part of members to change the language of the purposes in the context of the Second Amendment of the Articles. See Joseph Gold, Developments in the International Monetary System, the International Monetary Fund and the International Monetary Law Since 1971 (Martinus Nijhoff, 1983), at p. 216.
From the very beginning of the Fund, it was recognized that multiple currency practices, by virtue of the fact that they constitute a system of exchange rates, raise issues under Article IV, Section 4(a). In one paper, it was noted that “[T]he proposal to introduce a new multiple currency practice necessarily involves a threat to exchange stability or orderly exchange arrangements or constitutes a possible exchange alteration.” See Certain Aspects of the Jurisdiction of the Fund over Multiple Currency Practices, (note to Committee on Spreads and Multiple Currency Practices, June 3, 1947), at p. 6.
Sir Joseph Gold, Exchange Rates in International Law and Organization, p. 106.
EBM/75/207, December 23, 1975, p. 29. More generally, for a discussion of the distinction between domestic and exchange rate policy obligations under Article IV, Section 1, see Sir Joseph Gold, Exchange Rates in International Law and Organization, p. 107.
See Surveillance over Exchange Rate Policies: Balance of Payments Purposes, SM/77/97, April 28, 1977. To illustrate this approach, the paper referred to the Fund’s interpretation of “for balance of payment purposes” clauses in the context of Fund arrangements.
See EBM/75/205, December 23, 1975,, pp. 17–20.
See EBM/75/205, December 23, 1975, p. 17.
As is evident from the section of the 1977 Decision entitled “Principles of Fund Surveillance over Exchange Rate Policies,” exchange rate policies have been understood by the Executive Board as embracing a broad range of external policies that are specifically pursued for balance of payments purposes; e.g. “the introduction of or substantial modification for balance of payments purposes of restrictions on, or incentives for, the inflow or outflow of capital.” Moreover, to the extent that certain domestic policies are also pursued for balance of payments purposes, the indicators suggest that these would also be included; specifically, “the pursuit, for balance of payments purposes, of monetary and other domestic financial policies that provide abnormal encouragement or discouragement to capital flows.” However, domestic policies pursued for these specific purposes should be distinguished from domestic policies that only have this effect. The latter category would not be considered “exchange rate policies” within the meaning of the 1977 Decision.
Biennial Review of the Implementation of the Fund’s Surveillance and the 1977 Surveillance Decision— Modalities of Surveillance, Appendix 1 (SM/04/212, July 2, 2004).
Consistent with general principles of statutory construction, any call by the Fund for members to pursue particular exchange rate policies—or to refrain from pursuing certain policies—could not be so general as to make the specific obligations set forth in Article IV, Section 1 redundant. For example, a call to members to avoid all forms of exchange rate misalignment (irrespective of the motivation) would effectively render Article IV, Section 1(iii) redundant.