1 See Appendix A. The Articles of Agreement took effect on Dec. 27, 1945, and there have been no amendments so far. Under Art. XVII, the adoption of a proposed amendment requires acceptance by three-fifths of the members having four-fifths of the total voting power.

2 See Appendix B.

3 “One of the difficult tasks of the Fund representatives in the international discussions, especially in the early years, was … to indicate to what extent the problems that were being discussed in general terms with respect to some new reserve asset had already been solved in the Fund. These efforts were not wholly unsuccessful and indeed … many features of the new drawing rights have been modelled on the existing Fund facility.” J. J. Polak, the Economic Counsellor of the Fund, in an address to the Economic Seminar of the Fund, Sept. 14, 1967: “The New Facility in the IMF,“ 117 The Banker 964-971 (1967).

4 Art. III, Sec. 3(b). If a member's net official holdings were modest, it was able to make a smaller gold subscription, but it had a correspondingly larger potential obligation to repurchase its own currency with gold or convertible currencies in due course (Art. V, Sec. 7).

5 Art. III, Sec. 4.

6 Art. XX, Sec. 4.

7 Selected Decisions of the Executive Directors and Selected Documents (Third Issue, Washington, D. C, 1965) (hereinafter referred to as Selected Decisions), p. 54.

8 Art. V, Sec. 7.

9 Selected Decisions 21-24.

10 Art. V, Sec. 3(a) (iii), and Selected Decisions 20.

11 Art. V, Sec. 4.

12 Since the Fund's decision of Sept. 20, 1966, on the Compensatory Financing of Export Fluctuations, the definition of the gold tranche in terms of the Fund's holdings of a currency must exclude any holdings that result from an outstanding purchase under that decision. IMF Annual Report 1967, pp. 131-132, 159-161.

13 Selected Decisions 19-20.

14 Art. V, Sec. 5, and Selected Decisions 32-33.

15 Selected Decisions 21-24.

16 ’‘ The purposes of the International Monetary Fund are: … (v) To give confidence to members by making the Fund's resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.“

17 See note 15.

18 See, e.g., IMF Annual Report 1955, p. 85; Mookerjee, Subimal, “Policies on Use of Fund Resources,” 3 IMF Staff Papers 421–442 (1966)CrossRefGoogle Scholar.

19 See, for example, the tabulation of “Members’ Fund Positions” in the Fund's monthly International Financial Statistics.

20 One result of this treatment is that there is no decline in the presentation of a member's reserves because of its gold subscription to the Fund or because it converts into a reserve currency its currency purchased by another member from the Fund

21 Kenya Gazette Supplement Acts, 1966, p. 153 (Nairobi, March 29, 1966).

22 Banca d'Italia Abridged Version of the Beport for the Year 1966, Table 21 (p. 61).

23 The gold tranche is not the only asset that has been recognized as a result of the operations of the Fund. Claims against the Fund under the General Arrangements to Borrow (Selected Decisions 56-68) have been given this recognition because of the incidents that have been deliberately attached to those claims, some of which are derived from the gold tranehe. See, e.g., Banca d'Italia Eeport 1966 (note 22 above), pp. 63-64. See De Nederlandsche Bank N.V. Eeport for the Year 1965, p. 85: “ The Government's official reserves are deemed to include the net IMF position and other net foreign assets of the Government. The net IMF position consists of the net quota in the Fund and the claim on the Fund in respect of the General Arrangements to Borrow. The net quota in the Fund is in surplus or deficit to the extent to which the Fund's guilder holding falls short of or exceeds the Netherlands quota.” See also Hannan Ezekiel, “ The Present System of Eeserve Creation in the F u n d, “ 13 IMF Staff Papers 398-420 (1966).

24 See Art. IV, Sec. 6; Art. V, Sec. 5 (Selected Decisions 33); Art. VI, Sec. 1; Art. XV, Sec. 2(a).

25 Art. V, Sec. 8 (a), and Rule 1-2 of the Rules and Regulations.

26 See note 8.

27 See also Selected Decisions 49.

28 Ibid 33-39.

29 Some of them are included in Compendium of Plans for International Monetary Reform, edited by Robert G. Hawkins (Bulletin No. 37-38 of the C. J. Devine Institute of Finance, New York University, December, 1965). See also Report of the Study Group on the Creation of Reserve Assets (the Ossola Report), May 31, 1965.

30 Robert V. Roosa, Monetary Reform for the World Economy, Ch. I I (New York, 1965).

31 J. Marcus Fleming, Toward Assessing the Need for International Reserves (Essays in International Finance No. 58, Princeton University, February, 1967); George H. Willis and Fred L. Springborn, The Need for International Reserves (Hearing before the Subcommittee on International Exchange and Payments of the Joint Economic Committee, Congress of the United States, 90th Cong., 1st Sess., Sept. 14, 1967, pp. 47-91); IMF Annual Report 1967, Ch. 2.

32 '’ There is not now, and probably never will be, any scientific method of gauging precisely the global need for reserve growth. The effects of supplementing reserves are difficult to assess, and may be differently evaluated by good judges in different countries, or within the same country. Consequently, the lack of agreement as to whether there is or is not at the present time a need to supplement .reserves is something that should not surprise us. What is perhaps surprising is the degree of consensus that has been reached that sooner or later, given the prospects for gold production and consumption, and for the accumulation of reserve currencies, a measure of reserve stringency is likely to arise, that its consequences for world production, trade, aid, and development could be serious, and that it is desirable to set up in advance a machinery capable of dealing adequately with such a contingency. It is not perhaps fanciful to envisage a situation in which many countries at the same time seek an increase in their reserves and few are willing to accept a decline; and if the global supply of reserves were growing insufficiently to satisfy their aggregate demand, their policies would be mutually inconsistent and if actually pursued could produce a general shortage of reserves.” Pierre-Paul Schweitzer, “The New Arrangements to Supplement World Reserves and Their Implications for the Developing Countries” (Arthur K. Salomon Lecture, Dec. 5, 1967), 19 IMF International Financial News Survey, No. 49, Dec.

33 “ It is vital to the promotion of an efficient international adjustment process that conditional credit facilities should continue to play a major role in the international payments system. It has become clear, however, from the discussions of recent years that countries see important differences between access to such conditional facilities and reserves available as of right, so that augmented conditional facilities are not regarded as a full substitute for a normal accrual of reserves.” Pierre-Paul Schweitzer, Rio de Janeiro, Sept. 25, 1967

34 Art. XII, Sec. 3(a) and (g).

35 Selected Decisions 56-68. The General Arrangements to Borrow are standing arrangements under which the ten participants have agreed, subject to the terms of the G.A.B., to lend to the Fund so that its resources can be supplemented in order to enable it to enter into an exchange transaction with a participant. The participants are the United States, Deutsche Bundesbank, United Kingdom, France, Italy, Japan, Canada, Netherlands, Belgium, Sveriges Riksbank

36 '’ The process of deliberate reserve creation must be seen in the light of historical developments as a whole. On the national plane, the completely free issuing of bank notes and creation of book money by unsupervised private banks has in the course of the past hundred years gradually been transformed into a system under which money creation is controlled by the central bank with the aim of attaining greater economic stability. Now we are beginning to extend this deliberate control over money to the international sphere.” Otmar Emminger, of the Deutsche Bundesbank, in an address on “International Monetary Reform” in Montreal, Sept. 11, 1967.

37 From his speech at Rio de Janeiro.

38 2 Proceedings and Documents of United Nations Monetary and Financial Conference (Department of State Pub. 2866, International Organization and Conference Series 1, 3; 1948, hereinafter referred to as Procs. and Docs.) 1551.

39 2 Procs. and Docs. 1549.

40 “International agreement on this facility is indeed the major event in international monetary affairs since Bretton Woods. It will add to the Fund a separate and major task, to supply the world with the amount of reserves that the international financial community will judge to be necessary—a task that may start relatively small but that may well be responsible for the major part of total world reserves before the end of the century.” J. J. Polak, cited note 3 above.

41 J. J. Polak, loc. cit. note 3. See also Pierre-Paul Schweitzer, Arthur K. Salomon Lecture (cited note 32): “No attempt will be made to vary the supply of special drawing rights on a thermostatic principle in response to short-term fluctuations in world economic activity. This particular heating system would modify the economic temperature with too long a time lag to be operated in this way.“

42 See, for example, Report to Ministers and Governors by the Group of Deputies, July 7, 1966, pars. 52-54.

43 The speeches of the Managing Director and Governors at Eio de Janeiro have been published by the Fund in its Summary Proceedings of the 22nd Annual Meeting of the Board of Governors, September, 1967 (Washington, D. C).

44 The gold tranche of France and its claim under the General Arrangements to Borrow are included in the Situation des Avoirs et Engagements de la Banque de France et du Fonds de Stabilisation des Changes, Banque de France, Compte Rendu des Operations, 1966, pp. 79, 81.

45 See the speeches of the Managing Director referred to in this article, and the address of Frank A. Southard, Jr., Deputy Managing Director, on “The International Monetary Fund and the Foreign Exchange Market,” before the Danish Foreign Exchange Association, Copenhagen, Nov. 10, 1967.

46 This must be read subject to the qualification that the General Account (see Sec. 5(a) of this article) may hold and use special drawing rights, and “other holders“ also may be authorized. However, only the monetary authorities of participants will receive allocations.

47 Art. V, Sec. 6(a) and Art. VII, Sec. 2(H).

48 Joseph Gold, The International Monetary Fund and International Law: An Introduction 20-21 (Fund Pamphlet Series, No. 4, Washington, D. C, 1965).

49 Joseph Gold, The International Monetary Fund and Private Business Transactions 9 (Fund Pamphlet Series, No. 3, Washington, D. C, 1965).

50 See note 33.

51 Art. VI, Sees. 1 and 2.

52 Art. XIX (d); Art. XIV, Sec. 3.

53 Art. Till, Sec. 2(a).

54 For an indication of the problems that may be involved in conversion, see Selected Decisions 38-39.

55 M Art. IV, Sec. 4(b)

56 Joseph Gold, op. cit. note 48, p. 19.

57 Marcus Fleming, J., ‘ ‘ Use and Acceptance of Eeserve Claims,'’ 13 IMF Staff Papers 443–452 (1966)Google Scholar.

58 Joseph Gold, Maintenance of the Gold Value of the Fund's Assets 29-43 (Fund Pamphlet Series, No. 6, Washington, D. C, 1965).

59 Art. XII, Sec. 6.

60 1 Procs. and Docs. 1110.

61 Pierre-Paul Schweitzer in the Arthur K. Salomon Lecture, note 32 above; Gold, Joseph, “The Role of the International Monetary Fund in International Monetary Reform, with Special reference to Developing Countries,” 2 Proceedings of the International Society, Stanford School of Law 39–47 (1967)Google Scholar.

62 Pierre-Paul Schweitzer at Rio de Janeiro.

63 Art. XII, Sec. 4(e).

64 “ A s there has been so much discussion about this requirement of 85%, I want to clarify its significance. It is true that this provision confers a veto power on the European Common Market countries (just as the U.S. has such a veto power), but it gives them a veto only if they all vote the same way; and member countries of the Common Market are not committed to a uniform vote in such matters, although they would, of course, try to coordinate their views by previous consultation.” Otmar Emminger, note 36 above.

65 Art. XII, Sec. 5(d).

66 Ibid., Sec. 5 ( a ).

67 Ibid., Sec. 5(b).

68 Ibid., Sec. 2(c).

69 Ibid!., Sec. 2(d), Sec. 3(h).

70 Art. III, Sec. 2.

71 1 Procs. and Does. 1109.