Legal and institutional aspects of the international monetary system : selected essays

969 Pages·1984·51.499 MB·English

by  Joseph Gold

US$40.00 (or the equivalent
in most currencies)
Legal and Institutional Aspects
of the International Monetary
System: Selected Essays
Volume II
This volume reproduces, with slight revi-
sions, 16 essays contributed by the author to
books and periodicals published originally
under auspices other than those of the Interna-
tional Monetary Fund. A Supplemental Note is
attached to most Chapters to provide more
recent information on matters of detail. A first
volume, consisting of 14 other essays, was
published by the Fund in 1979. The author has
drawn on his knowledge as a participant in the
negotiation and drafting of the First and Second
Amendments of the Fund's Articles.
The introduction to this second collection
discusses the language of the Fund's Articles
and the problems of communication. The es-
says, which are addressed to all who are
interested in the international monetary system
and not to lawyers only, are presented in six
sections: General Topics, Aspects of the Fund,
Exchange Rates, Reserve Assets, Drafting in
the Monetary Field, International Law. The
first essay in the Section entitled General
Topics is, in effect, a monograph that was the
basis of a series of lectures delivered at the
Academy of International Law at The Hague in
1982. This essay discusses the concept of the
international monetary system, its relationship
to the Fund and to international monetary law,
and the changes that have occurred since 1971.
Subsequent essays in the volume amplify
some of the topics in the first essay, but
examine additional topics as well. Among the
topics considered in these essays are the con-
cepts of symmetry and its relation to uni-
formity, substitution, the relationship between
the Fund and the World Bank, the Fund's
General Arrangements to Borrow, the impact of
©International Monetary Fund. Not for Redistribution
Legal and
Institutional Aspects
of the
International
Monetary
System:
Selected Essays
Volume II
by
Joseph Gold
©International Monetary Fund. Not for Redistribution
LEGAL AND INSTITUTIONAL
ASPECTS OF THE
INTERNATIONAL MONETARY
SYSTEM: SELECTED ESSAYS
VOLUME II
©International Monetary Fund. Not for Redistribution
This page intentionally left blank
©International Monetary Fund. Not for Redistribution
Legal and Institutional Aspects
of the
International Monetary System
Selected Essays: Volume II
By
JOSEPH GOLD
INTERNATIONAL MONETARY FUND
Washington, D.C. • 1984
©International Monetary Fund. Not for Redistribution
®1984 by the International Monetary Fund
International Standard Book Number: 0-939934-34-5
©International Monetary Fund. Not for Redistribution
CONTENTS
PAGE
PREFATORY NOTE xvii
INTRODUCTION 1
Annex: The Language of the Fund's Articles 11
General Topics
1. DEVELOPMENTS IN THE INTERNATIONAL MONETARY SYSTEM,
THE INTERNATIONAL MONETARY FUND, AND INTERNATIONAL
MONETARY LAW SINCE 1971 17
Section I: International Monetary System, International
Monetary Fund, and International Monetar Law 17
Three Basic Concepts 17
Keynes and White 18
The System as a Legal Concept 22
International Monetary System and Second
Amendment 26
An Example of Interplay Among the Three Concepts 29
The Fund and the International Monetary System 36
Section II: Definitions of the International Monetary
System 39
Approaches to an Understanding of the Concept 39
A Digression: Excluded Elements? 41
Further Approaches to an Understanding 43
"International" 44
Fund's 1965 Annual Report 48
Further Consideration of "International" 5?
"Monetary" 56
Further Consideration of ''Monetary'' 61
Fund and Balance of Payments 6?
Balance of Payments: Purposes and Effects 67
A Non-System? 69
Some Consequences of Perception 73
Section III: Former Par Value System 74
Rationale of International Supervision 74
Bretton Woods Principles 76
International Concern 77
Stability Without Rigidity 79
Competitive Exchange Alterations 81
Fixed Exchange Rates 8?
V
©International Monetary Fund. Not for Redistribution
•CONTENTS
Floating Exchange Rates 86
Multiple Currency Practices 87
Discriminatory Currency Arrangements 89
Member's Ultimate Authority 92
Section IV: Proposals to Reform Law on Exchange
Arrangements 94
United States Announcement of August 15, 1971 94
Committee of Twenty: U.S. Proposals 98
Outline of Reform 104
Section V: Present Law on Exchange Arrangements 108
Abandonment of Interim Period 108
Principles of Provisions Now in Operation 113
International Concern 113
Stability Without Rigidity 119
Competitive Exchange Alterations 126
Fixed Exchange Rates 127
Floating Exchange Rates 128
Multiple Currency Practices 130
Discriminatory Currency Arrangements 133
Member's Ultimate Authority 134
Versailles Communique 134
Section VI: Some Effects of Present Exchange
Arrangements on International Law 136
Problems Under Treaties 136
Measurement of Variation 136
Units of Account 138
Other Problems 140
Pooling of Exchange Risks 141
European Monetary System 142
Section VII: A Possible Par Value System 150
Conditions for Par Value System 150
Some Features of Article IV, Section 4 151
Principles of Schedule C 154
International Concern 154
Stability Without Rigidity 156
Competitive Exchange Alterations 158
Fixed Exchange Rates 159
Floating Exchange Rates 160
Multiple Currency Practices 161
Discriminatory Currency Arrangements 161
Member's Ultimate Authority 161
vi
©International Monetary Fund. Not for Redistribution
CONTENTS
Section VIII: Convertibility 168
Convertibility in General 168
Market Convertibility 170
Official Convertibility 175
Purchase and Sale of Gold 176
Convertibility Through the Fund 177
Redemption of Balances with SDRs 180
Currency Convertible in Fact 181
Some Characteristics of Official Convertibility 182
Reform: Asset Settlement 183
Second Amendment 187
Market Convertibility 187
Purchase and Sale of Gold 188
Convertibility Through the Fund 188
Redemption of Balances 191
Freely Usable Currencies 192
Section IX: Reserve Assets 194
Definition 194
Need for Reserves 199
Types of Reserves 200
SDRS 203
Characteristics 204
Uses 205
Alleged Continuing Disadvantages 210
Gold 216
Change in Role of Gold 216
Gold Under Second Amendment 219
Some consequences of fluctuating price 222
Domestic price of gold 223
ECUs 227
Issue of ECUs 227
Settlements 229
Exchanges and unwinding 231
Development of ECU 232
ECU and SDR 234
Reserve Currencies 235
Section X: A Summary 238
Sections I and II, 238
Section III 240
Section IV 241
Section V 242
vii
©International Monetary Fund. Not for Redistribution