The International Bank for Economic Cooperation
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Henryk Francuz
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IN JANUARY 1949 a Council for Mutual Economic Assistance (CMEA)1 was established to serve as the institutional framework for economic cooperation among the countries in Eastern Europe and the U.S.S.R. The founding members of the CMEA were Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and the U.S.S.R. Albania joined within a month, and Eastern Germany became a member during the following year. After 1953 mainland China, Outer Mongolia, North Korea, and North Viet-Nam were admitted as observers. In 1961 Albania ceased to participate in the Council. In 1962 Outer Mongolia became a member, and Cuba received observer status. From 1965 Yugoslavia has participated in some of the CMEA’s activities.

Abstract

IN JANUARY 1949 a Council for Mutual Economic Assistance (CMEA)1 was established to serve as the institutional framework for economic cooperation among the countries in Eastern Europe and the U.S.S.R. The founding members of the CMEA were Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and the U.S.S.R. Albania joined within a month, and Eastern Germany became a member during the following year. After 1953 mainland China, Outer Mongolia, North Korea, and North Viet-Nam were admitted as observers. In 1961 Albania ceased to participate in the Council. In 1962 Outer Mongolia became a member, and Cuba received observer status. From 1965 Yugoslavia has participated in some of the CMEA’s activities.

IN JANUARY 1949 a Council for Mutual Economic Assistance (CMEA)1 was established to serve as the institutional framework for economic cooperation among the countries in Eastern Europe and the U.S.S.R. The founding members of the CMEA were Bulgaria, Czechoslovakia, Hungary, Poland, Rumania, and the U.S.S.R. Albania joined within a month, and Eastern Germany became a member during the following year. After 1953 mainland China, Outer Mongolia, North Korea, and North Viet-Nam were admitted as observers. In 1961 Albania ceased to participate in the Council. In 1962 Outer Mongolia became a member, and Cuba received observer status. From 1965 Yugoslavia has participated in some of the CMEA’s activities.

In the immediate postwar period, foreign trade among the CMEA members was based on purely bilateral clearing arrangements. Under that regime a credit balance in favor of one country could not be used for payments to a third country. Although re-exports of commodities were used to some extent to balance bilateral clearing accounts, the only way to balance these accounts in the longer run was through adjustment of bilateral trade. To overcome some of the shortcomings of this bilateral system, certain CMEA member countries in 1949 made a number of triangular clearing arrangements. These allowed for triangular settlements among Poland, Finland, and the U.S.S.R., and among Czechoslovakia, Finland, and the U.S.S.R. Triangular settlements were also arranged among the U.S.S.R., Burma, and Czechoslovakia. These arrangements were terminated after a few years, apparently because they did not operate satisfactorily.

Regional clearing arrangements among member countries were discussed at a CMEA meeting in Warsaw in 1957. As a result, a Central Gearing House was set up by the Gosbank in Moscow, but the operations of the Clearing House appear to have been insignificant, and the great majority of payments between the CMEA countries continued to be channeled through bilateral accounts.

In December 1962 the CMEA established a Permanent Commission for Foreign Exchange and Financial Problems, on which each member country was represented by its Finance Minister. The principal tasks of this Permanent Commission were to make proposals for improvement of the payments mechanism among the CMEA countries, for the undertaking of joint investment projects, and for the exchange of information about banking practices in the member countries. As a result of proposals made by this Permanent Commission, the CMEA countries on October 22, 1963 founded the International Bank for Economic Cooperation (IBEC) with a view to establishing a multilateral settlement system for payments among themselves. This Bank started operations on January 1, 1964.

Organization and Structure of the IBEC2

The Articles of Agreement of the Bank were signed by the Governments of eight CMEA countries: Bulgaria, Czechoslovakia, Eastern Germany, Hungary, Outer Mongolia, Poland, Rumania, and the U.S.S.R. Membership is also open to non-CMEA countries “provided they share its aims and purposes and agree to assume obligations resulting from . . . the Statutes of the . . . Bank.” Admission of new members requires the consent of all existing members. The Bank is located in Moscow and is governed by a Council and a Managing Board.

The council

The Council is composed of representatives of all the member countries; each member country has one vote, and decisions require unanimity. The Council, which meets at least once every three months, sets the general policy of the Bank: it approves credit plans, annual reports, balance sheets, and distribution of profits, as well as instructions and rules governing the Bank’s operations. It also establishes interest rates on credits and deposits, appoints members of the Managing Board and staff, and approves the administrative budget.

The Managing Board and the departments

The Board is the executive body in charge of the Bank’s day-to-day operations. Members of the Board are appointed for a period of up to five years by the Council, which also determines the number of members. At present, the Board is composed of one representative from each member country. The Council appoints one member of the Board as its Chairman. The three principal departments are as follows:

(1) The Credit Planning Department, which is concerned with projections of sources and use of funds and with studies concerning the granting and repayment of credits.

(2) The Foreign Exchange and Economic Research Department, which studies the economic situation in member and nonmember countries, exchange rates, and price developments and questions connected with gold and with conversion, arbitrage, and other foreign exchange operations. This department is also in charge of the Bank’s relations with other banking institutions.

(3) The Operational Department, which is responsible for operations and statistics.

The Bank’s capital

The authorized capital of the Bank is 300 million “transferable rubles” (TR),3 to be subscribed by member countries in relation to the value of their exports in intrabloc trade. Subscriptions can be made either in the form of transferable ruble credit balances with member countries or in gold or convertible currencies.

In the first year each member country paid up 20 per cent of its quota in the form of a credit balance in transferable rubles. The Bank’s initial capital was thus equivalent to TR 60 million. The Council has the power to determine when additional subscriptions will be made and in what form. In 1966 it decided to call up a further 10 per cent of the authorized capital, i.e., TR 30 million, to be paid in gold or in convertible currencies. The Council considered that this would help the Bank in attracting convertible currency deposits and enhance its ability to extend credits in convertible currencies. Member countries appear to have the right to obtain short-term credits in convertible currencies up to the amount of their subscription in gold or convertible currency;4 this arrangement would be similar to the “gold tranche” in the Fund.

The technique of settlements

Foreign trade transactions between import and export organizations in CMEA countries are generally concluded on the basis of world market prices and are expressed in transferable rubles. Payments for each transaction are channeled through bilateral accounts kept in transferable rubles. Payments for nontrade transactions, such as tourism and other services, are denominated in national currencies and are kept on separate bilateral accounts. Transfers from these accounts to the transferable ruble accounts can take place only after the amount in question has been expressed in transferable rubles with the aid of an agreed exchange rate, which usually varies from one category of transaction to another. This procedure is set out in special agreements governing nontrade payments between banks in member countries.

Trade between CMEA countries is governed by five-year bilateral agreements. Actual trade negotiations are conducted in two stages. Basing their actions on the existing long-term agreements, pairs of countries first agree provisionally on a certain exchange of goods in a given year. At this stage, there is no formal obligation to export or import and no need to balance receipts and payments bilaterally. The trade negotiations are then continued on a multilateral basis. At this second stage, the value of each country’s prospective exports to all the CMEA countries is compared with that of its prospective imports from all other CMEA countries. Adjustments are then made in the provisionally agreed bilateral exchange of goods with a view to ensuring that, except for transactions to be covered by credit from the IBEC or deposits with the IBEC (see below), total receipts will equal total payments on a multilateral basis.

In each member country, one bank is authorized to conduct transactions through the IBEC, and the clearing takes place as follows: at the end of each working day, the authorized bank in each country notifies the IBEC (by cable) of that day’s export transactions with all other CMEA countries. The IBEC then credits the account of the authorized bank in the exporting country and debits the accounts of the authorized banks in the importing countries. Thus the authorized bank in each country, instead of acquiring separate bilateral claims on, or debts to, the authorized banks in other countries, acquires one net accounting surplus or deficit with the IBEC. A surplus on bilaterally agreed transactions with one member country is thus offset by a deficit on bilaterally agreed transactions with another country, and to that extent the transferable rubles are actually transferable among member countries.

The annual Bulletins of the IBEC for 1965 and 1966 discussed the possibility of including nonmembers in the multilateral settlement system, and a decision of the Council in 1965 laid down the prerequisite conditions. Nonmembers could choose to settle in transferable rubles either all or part of their trade with member countries. A bank in a nonmember country would open an account with the IBEC, and settlements would be made through this account. The annual Bulletin for 1966 mentioned various operations in which the IBEC might engage with non-member countries, including the sale and purchase of balances on bilateral clearing accounts. There is no information on the extent of such transactions with nonmember countries.

Credit operations

To ensure that settlements are executed without delay, the IBEC grants credit to authorized banks in member countries. According to its Statutes, credit is granted on the basis of a credit plan, based on estimates of the expected inflow and outflow of funds. Credit plans are drawn up quarterly, and member countries are assured of obtaining credit in accordance with these plans. This promotes “regularity in settlement of accounts on mutual deliveries of goods” and has “stimulated the development of foreign trade.”5

According to its Statutes, the IBEC may grant five types of credit, of which the first two are directly connected with the operation of the multilateral settlement system: (1) settlement credits, (2) seasonal credits, (3) balance of payments credits, (4) credits for the expansion of exports, and (5) project credits for the establishment, modernization, and operation of industrial enterprises and other productive investments.

Settlement credits are a form of overdraft comparable to the swing limits under bilateral payments agreements. They are extended automatically and are usually repaid within a month. Seasonal credits may be granted for periods in which payments exceed receipts owing to seasonal fluctuations. Such credits are repayable before the end of the calendar year. To finance temporary deficits resulting from delays in deliveries, the Bank may grant balance of payments credits. These are normally repayable within the calendar year; in exceptional circumstances they may be granted for a somewhat longer period, but they must in any case be repaid by the end of the next calendar year. Credits for the purpose of export expansion may be granted for a period of two years. Project credits may be extended for longer terms; credits of this type may be extended for joint projects by two or more members, but no such joint credits have been granted so far.

The Statutes of the Bank limit the total of interest-free credit granted to any member to 3 per cent of that member’s foreign trade with other members. For the years 1964–66, credits up to 2.5 per cent of trade turnover were free of interest. Interest rates charged on settlement and seasonal credits exceeding this exemption varied between 1.5 per cent and 2 per cent per annum. Since 1967 it has become the Bank’s practice to charge interest at these rates on half the settlement and seasonal credits extended to a member, irrespective of the relationship between the amount of such credits and the member’s foreign trade turnover. No information is available on the interest rates charged by the IBEC on other types of credit.

Deposits

If, as a result of the clearing, a member’s account has a credit balance in excess of the amount that the member wishes to keep as a working balance on current deposit, the excess may be transferred to a time deposit account. On current deposits, the IBEC pays 0.25 per cent interest per annum; for time deposits, the rate ranges from 0.5 per cent to 1.5 per cent per annum.

Foreign exchange operations

The IBEC accepts deposits in convertible currencies from member and nonmember countries. Since 1966 it has also granted credit to member countries in convertible currencies, but little information is available on these operations (see below).

IBEC’s Operations, 1964–676

The clearing turnover of the IBEC, i.e., the total of bilateral payments cleared through the multilateral settlement system, amounted to TR 22.9 billion in 1964. It increased by some 5 per cent in 1965, declined slightly in 1966, and rose by some 11 per cent, to TR 26.6 billion, in 1967. Trade transactions accounted for about 94 per cent of the clearing turnover in 1967.

Settlement and seasonal credits granted during 1964 amounted to TR 1.5 billion. They subsequently increased in 1965, decreased in 1966, and then rose to TR 1.9 billion in 1967. The proportion of clearings financed by such credits was reported to be 10 per cent in 1964, 13 per cent in 1965, and 12 per cent in both 1966 and 1967.

At the end of 1967, total credit outstanding from the IBEC to member countries amounted to TR 314 million, compared with TR 126 million at the end of 1964. Since settlement credits and seasonal credits must be repaid by the end of each calendar year, it must be assumed that these amounts exclude such credits. Of the credits outstanding at the end of 1967, TR 287 million was in transferable rubles, compared with TR 224 million at the end of 1966. The remainder—TR 27 million at the end of 1967 and TR 25 million at the end of 1966—presumably consisted of credits in convertible currencies.

Deposits rose rapidly in the period 1964–67; of the total (TR 453 million) at the end of 1967, TR 289 million was in time deposits.

Little information is available on the IBEC’s transactions in convertible currencies. The “volume of transactions in convertible currencies” was reported to have risen from TR 2 billion in 1965 to TR 9 billion in 1967 ($2.2 billion and $10 billion, respectively). It is by no means clear what this means; the figures are very large indeed. Each successive annual Bulletin of the IBEC has contained a statement to the effect that the number of correspondent banks in nonmember countries and the number of their accounts with the IBEC had increased rapidly. No information is available on deposits in convertible currencies with the IBEC.

Effects of IBEC Operations on the Foreign Trade of Members

Appendix I shows that the average annual increase in trade between CMEA countries was substantially smaller during 1964–67 than in the pre-IBEC period, 1960–63. Appendix II suggests, furthermore, that there is no evidence that the degree of bilateral balancing of exports and imports between individual CMEA countries has decreased as a result of the operations of the IBEC. The question arises why this was so and what alternative or supplementary arrangements would be required if the volume and degree of multilateralization of trade among CMEA countries were to be effectively increased. In this connection it may be useful to draw a parallel between the multilateral settlement system of the IBEC and that of the European Payments Union (EPU), to which it bears resemblance and which appears to have contributed significantly to the spectacular growth and multilateralization of trade among EPU members in the years following its establishment in 1950.

Under both the IBEC and the EPU arrangements, a member’s bilateral deficits and surpluses with individual member countries are transformed into one net accounting deficit or surplus with all other members combined. As a result, members are no longer required to balance payments with each other bilaterally; only the balance of payments with all other members of the group continues to be relevant. The similarity between the two multilateral settlement systems ends with this multilateral offsetting of bilateral deficits and surpluses, for there are at least three important differences.

1. The EPU arrangements were accompanied by parallel arrangements for a wide-ranging liberalization of trade and payments among members. The existing bilateral import quotas were replaced by “global quotas,” and member countries were under an obligation gradually to extend the list of imports not subject to restrictions when imported from member countries and to enlarge the global quotas for imports still subject to such restrictions. Moreover, as their balance of payments position improved, they also had an inducement to extend the trade liberalization to other countries.

2. From the beginning the EPU was designed not only to eliminate strict bilateralism in payments between members but also to “harden” such payments gradually and thus to facilitate the eventual transition to world-wide multilateralization of payments and full convertibility of members’ currencies. Under the EPU arrangements, net accounting surpluses and deficits were settled in part by credit and in part by payments in gold. The proportion of the settlement that was required in gold increased as net accounting surpluses or deficits accumulated, and this proportion was gradually raised during the lifetime of the EPU.

3. In EPU member countries, foreign trade, in principle, was conducted by private firms that, within the confines of the existing trade and payments restrictions, were allowed to base their decisions as to whether and where to import or export on market considerations. Moreover, such decisions could be taken rationally, given the existence of a market price system in all member countries and of fixed unitary exchange rates among their currencies.

As a result of these three basic features of the EPU and the accompanying trade arrangements, member countries were able and had the inducement to move from the system of bilateral trade and payments to one in which there would be no restrictions on international trade and payments and where the advantages of the international division of labor could, thus, be realized to the fullest possible extent.

The IBEC arrangements were also designed to enable member countries to break out of the strait jacket of strict bilateralism in payments with other members. The accompanying trade arrangements were, however, confined to those required for the adjustment of the planned trade volumes among members to a new situation in which payments no longer had to be balanced bilaterally. These adjustments do not appear to have had any appreciable effect in increasing the actual trade flows among CMEA countries or the degree of their “multilateralization.” A good part of the explanation is probably to be found in the fact that in these countries prices continue to be determined essentially by administrative decision rather than by market forces and, thus, do not necessarily reflect the relative scarcity of resources. This fact and the absence of viable unitary exchange rates for the currencies concerned, which would allow a direct comparison of foreign and domestic prices, make it difficult if not impossible to determine the real cost advantages of imports and exports. The postwar specialization of particular CMEA countries on particular lines of production within the CMEA trading area, which may not always have corresponded to differences in economic costs, may also have been a major obstacle to significant changes in the pattern of trade among them.

It is probable that in the CMEA countries the introduction of a pricing system that more accurately reflects the relative scarcity of resources, coupled with the establishment of viable unitary exchange rates for currencies, will prove to be an essential condition for their eventually reaping the full benefits from foreign trade. This appears to be true for their foreign trade with other CMEA countries as well as that with the rest of the world. Unlike the EPU arrangements, the present IBEC arrangements are clearly not designed as a “halfway house” toward full multilateral trade and convertibility of currencies. The IBEC arrangements contain provisions for outside countries to join the multilateral settlement system (provisions that appear to have remained inoperative) but do not provide for a gradual “hardening” of payments among members. It should be noted in this connection that the IBEC has rejected a proposal by Poland that CMEA countries with a persistent surplus in payments with other members should receive, and countries in persistent deficit should pay, 10 per cent of their cumulative accounting surplus or deficit in gold or convertible currency.

APPENDICES

I. Trade Among CMEA Members, 1960–671

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Sources: Statistical Yearbooks of CMEA countries.

Mongolia, although a member of CMEA, is not included since its share in CMEA"s trade is negligible.

Exports and imports f.o.b.

Totals may not add because of rounding.

Hungary is the only CMEA country that reports imports on a c.i.f. basis. The reported figures have been reduced by 10 per cent for adjustment to an f.o.b. basis.

II. Quantitative Measurement of Trade Multilateralization Among CMEA Countries

An attempt is made below to measure to what extent the operations of the IBEC have led to a greater multilateralization of trade among CMEA countries. This is done on the basis of an “index of multilateral trade balancing” used by the League of Nations and elaborated by Michael Michaely.7

“Bilateral balancing” as defined here occurs when a country A exports goods to country B in exchange for an equal value of goods imported from B. “Multilateral balancing” on the other hand refers to a situation where the net proceeds of A’s exports to B are used to finance imports from third countries. The analysis concerns only trade among member countries of the CMEA.8

The formula for the index of multilateral balancing of one country’s trade with all other CMEA countries, denoted by Bjc, is

B jc = 100 j s = 1 | x js X jc - m js M jc | j s = 1 ( x js X jc + m js M jc ) .

xj8 = exports of country j to country s.

Xjc = total exports of country j to entire CMEA area.

mj8 = imports of country j from country s.

Mjc = total imports of country j from entire CMEA area.

The possible range of the index is from zero to 100. It will be zero in a situation of a perfect bilateral balancing when the proportion of each country j’s share in country j’s exports is equal to the proportion of that country’s share in j’s imports. The index will be 100, in the opposite extreme of perfect multilateral balancing, when country j imports nothing from countries to which it exports.9 The following simple numerical example (Table A) illustrates these two extremes, and an intermediate position, in a three-country model.

Table A.

Trade and Index of Multilateral Balancing of Country a

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The index does not take account of services and other transactions in invisibles, since these are known to be small relative to the volume of merchandise trade; this omission is unlikely to affect to any significant extent the changes in the index between the pre-IBEC and post-IBEC years.

Table B shows the index of multilateral trade balancing for each individual CMEA country for each of the years 1960–67 and the weighted average of individual countries’ indices. For the purpose of comparing the multilateral trade balancing before and after the introduction of the multilateral settlement system operated through the IBEC, average indices for 1960–63 and 1964–67 were calculated. As the table shows, the indices are relatively low, indicating a high degree of bilateral balancing. There are very considerable variations in the index, both between individual countries and between years. However, with the exception of Hungary, the average index for 1960–63 is in every instance higher than that for 1964–67, and for most countries substantially so, suggesting that there has been no increase in multilateralization of trade as a result of the IBEC’s operations.

Table B.

Indices of Intra-CMEA Trade Multilateralization

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La Banque Internationale de Coopération Economique

Résumé

Cet article décrit l’organisation et les activités de la Banque Internationale de Coopération Economique (BICE), qui a été fondée en 1964 en vue de gérer un système de règlement multilatéral des paiements entre les pays membres du Conseil d’Assistance Economique Mutuelle (CAEM). Des données statistiques montrent que l’augmentation annuelle moyenne du commerce entre les pays du CAEM a été sensiblement plus faible au cours de la période 1964—67, les quatre premières années de fonctionnement de la BICE, qu’au cours de la période antérieure 1960–63.

L’auteur cherche à mesurer le degré de multilatéralisation du commerce entre les pays du CAEM. Cette tentative ne fait ressortir aucun indice d’une diminution du degré d’ajustement bilatéral des exportations ou des importations entre pays du CAEM pris individuellement due au fonctionnement de la BICE. L’article établit un certain parallèle entre la BICE et l’Union Européenne des Paiements (UEP), dont l’objet commun est de permettre à leurs pays membres d’échapper à un strict bilatéralisme dans leurs paiements avec les autres membres.

Comme c’était le cas dans l’UEP, en vertu des accords de la BICE les déficits ou excédents bilatéraux d’un membre envers les autres pays membres pris individuellement sont transformés en un déficit ou en un excédent comptable net unique envers tous les autres membres réunis.

Dans les pays du CAEM il est probable que notamment l’adoption d’un système de fixation des prix traduisant plus fidèlement la rareté relative des ressources se révélera essentielle pour qu’en fin de compte ils bénéficient pleinement de leur commerce extérieur—tant avec les autres pays du CAEM qu’avec le reste du monde. A la différence des accords de l’UEP, les accords actuels de la BICE ne sont pas conçus comme une “étape intermédiaire” vers un commerce pleinement multilatéral et la convertibilité des monnaies, et ils ne prévoient pas non plus un “durcissement” progressif des paiements entre membres. La BICE a rejeté une proposition en vertu de laquelle les pays du CAEM enregistrant des excédents ou des déficits permanents de paiements avec les autres membres recevraient ou paieraient respectivement 10 pour cent de leur excédent ou de leur déficit comptable cumulatif en or ou en monnaie convertible.

El Banco Internacional de Cooperación Económica

Resumen

Este artículo describe la organización y actividades del Banco Internacional de Cooperación Económica (BICE), fundado en 1964 para encargarse de la operación de un sistema multilateral para saldar los pagos entre los países miembros del Consejo de Ayuda Económica Mutua (CAEM). Los datos estadísticos indican que el promedio del aumento anual de los intercambios entre los países del CAEM fue mucho menor durante los años 1964–67—los cuatro primeros años de funcionamiento del BICE—que en el período anterior al BICE, 1960–63.

Cuando se trata de medir el grado de multilateralización de los intercambios entre los países del CAEM, no aparece ninguna evidencia de que haya disminuido, como resultado de las operaciones del BICE, el grado en que se equilibran bilateralmente las exportaciones e importaciones entre los distintos países del CAEM. El autor establece un cierto paralelismo entre el BICE y la Unión Europea de Pagos (UEP), al haber sido ambos creados con la finalidad de hacer que sus países miembros puedan liberarse de un estricto bilateralismo en sus pagos con los otros miembros.

Al igual que ocurría en la UEP, según el procedimiento del BICE los déficit o superávit bilaterales de un país miembro con cada uno de los otros se transforma en un solo déficit o superávit contable neto frente al conjunto de los demás países miembros.

Lo probable es que resulte esencial el establecimiento de, entre otras cosas, un sistema de precios que refleje con mayor fidelidad la escasez relativa de los recursos, si es que quieren llegar a cosechar el beneficio pleno de sus intercambios con el exterior—tanto con otros países del CAEM como con el resto del mundo. A diferencia de los acuerdos de la UEP, los actuales acuerdos del BICE no tienen por objeto constituir “un alto a mitad del camino” hacia un multilatéralisme pleno en cuanto al comercio y la convertibilidad de las monedas, ni pretenden llevar a un “endurecimiento” gradual de los pagos entre los países miembros. El BICE ha rechazado una propuesta de que los países del CAEM que registren superávit o déficit de pagos persistentes frente a otros miembros deberían recibir o pagar, respectivamente, en oro o en moneda convertible el 10 por ciento de sus superávit o déficit contables acumulativos.

*

Mr. Francuz, economist in the European Department, is a graduate of the Central School for Planning and Statistics, Warsaw, and taught economics at the University of Warsaw. After leaving Poland in 1957, he was in the Research Department of the Bank of Israel.

1

The Council for Mutual Economic Assistance (CMEA) is also known as the Council on Mutual Economic Aid and Comecon. Eastern European countries and the United Nations use the English abbreviation CMEA; in its native language the U.S.S.R. uses SEV; Bulgaria, SIV; Poland, RWPG; and Eastern Germany, RGW.

2

“The International Bank for Economic Cooperation,” Moscow Narodny Bank Ltd., Quarterly Review (London), Winter 1964; Articles of Agreement Concerning Multilateral Settlement of Accounts in Transferable Roubles and the Organization of the International Bank for Economic Cooperation; International Bank for Economic Cooperation, Bulletins (Moscow), 1964–67.

3

The accounts of the Bank are kept in “transferable rubles” with a nominal gold content of 0.997412 gram of fine gold, the same as that of the U.S.S.R. ruble and, therefore, equivalent to $1.10. The transferable ruble is not convertible into U.S.S.R. rubles or gold nor is it automatically “transferable” into any currency; it serves solely as a unit of account. The practical effect of the “gold content” provision seems to be that the claims and liabilities of the Bank have a gold clause.

4

L. Sulyaeva, “Valyutno-finansovoe sotrudnichestvo stran-chlenov SEV,” Planovoe Khoziaistvo, Vol. XLIV (May 1967), pp. 77–81.

5

IBEC, Bulletin (Moscow), 1964, p. 6.

6

IBEC, Bulletins (Moscow), 1964–67.

7

Michael Michaely, “Multilateral Balancing in International Trade,” The American Economic Review, Vol. VII (September 1962), pp. 685–702. A similar study by J. Wilczynski was presented at the Fortieth Congress of the Australian and New Zealand Association for the Advancement of Science, in Christchurch, New Zealand, January 1968; his paper, “Multilateralization of East-West Trade,” was published in Economía Internationale (Genoa), Vol. XXI, May 1968, pp. 301–20.

8

Owing to lack of data, Mongolia was excluded from the study. Foreign trade data are based on national statistics; data for Bulgaria’s and Hungary’s trade with CMEA partners in 1967 were derived from trade returns of other CMEA countries. Hungary’s import figures were reduced by 10 per cent to adjust them to an f.o.b. basis.

9

The index for Western European countries as measured by Michaely for the years 1954–58 averaged above 20.

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