Margaret G. de Vries
THERE HAS BEEN a great deal of misconception about the Fund’s approaches to fluctuating exchange rates, or as they are often called, “floating rates.” Critics of the Fund frequently suggest that it has been too uncompromising in its support of the present world-wide system of fixed exchange rates. The implication is that the Fund’s attitude stems primarily from the requirements of its Articles of Agreement, or that its economic reasoning is too rigid. It is worthwhile, therefore, to take a deeper look at what the Fund policies have been, and their underlying rationale.
The Fund has, of course, consistently and strongly supported the system of institutionally agreed par values. However, this stand has only in part reflected the requirements of its Articles; it owes far more to the Fund’s own widening experiences with deviations from that system. Furthermore—and this is much less generally realized—while the pursuit of fixed exchange rates has remained the underpinning of its philosophy, the Fund has also, temporarily and in carefully delineated circumstances, supported what it regards as less than ideal types of exchange rate adjustments; the latter have included fluctuating rates.