Section 2(B) Of Article Viii Of The International Monetary Fund Agreement
A year later, the French Finance Minister, Jean-Pierre Fourcade at the time, said that SDRs should be the common denominator of the new exchange rate system, whose value is “defined and maintained in order to avoid a deterioration of the instrument.” He believed that gold should play an “active role” in settlements between central banks. He called for gold to be treated “like any other monetary policy asset” and for central banks to be free to buy and sell gold at a market-derived price. France, which at the time varied its own currency, however, opposed the principle of variable interest rates, which it said was unfavourable to the evolution of world trade. IMF, Summari St., 1974, at, 90, 96-99. The devaluations in Britain and Italy almost certainly exceed the amounts justified by their underlying competitive positions, and there is strong evidence that Britain has voluntarily reduced its interest rate to obtain precisely such an advantage. History suggests that other countries will not slowly imitate these steps when the effects begin to deflate, although the French have so far shown admirable restraint. Such measures are contrary to the obligation to countries, in Article IV, paragraph 1, paragraph iii), of the proposed amendment, “to avoid unmanipulated exchange rates or the international monetary system in order to avoid an effective adjustment of the balance of payments or to obtain an unfair competitive advantage over other members. Notwithstanding the provisions of other articles of this agreement, a member who informed the Fund that he was considering the use of transitional provisions under this provision may maintain restrictions on payments and transfers of ongoing international transactions as of the date of entry into the agreement and adapt to changing circumstances. However, in their exchange rate policy, members are constantly attentive to the Fund`s objectives and, as soon as conditions permit, they take all possible steps to develop trade and financial agreements with other members facilitating international payments and promoting a stable exchange rate system. In particular, members remove the restrictions in this section as soon as they are satisfied that, in the absence of such restrictions, they will be able to pay their balance of payments in a manner that does not place undue pressure on their access to the Fund`s general resources. 8 The following European countries have accepted the convertibility obligations set out in Sections 2, 3 and 4 of Article VIII of the IMF Agreement effective 15 February 1961: Belgium, France, the Federal Republic of Germany, Ireland, Italy, Luxembourg, the Netherlands, Sweden and the United Kingdom.