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y TREASURY DEPARTMENT Washington CONFIDENTIAL! To be held in s t r i c t confidence, and no portion, synopsis, or intimation to be published before 8t00 P.M., E.W.T., Friday, April 21, 1944. Summary of the Recommendations of the Technical Experts c The experts propose the establishment of an International Monetary Fund as a permanent institution for international monetary cooperation. The purpose would be to promote exchange s t a b i l i t y , assure multilateral payment f a c i l i t i e s , help lessen international disequilibrium and give confidence to member countries. All of the United and Associated Nations would subscribe approximately &8 billion to the Fund in the form of gold and local currency in accordance with an agreed formula. The resources of the Fund would be available under adequate safeguards to help member countries to maintain exchange s t a b i l i t y while they correct maladjustments in their" balance of payments. Member countries would be able to buy,foreign exchange from the Fund with their own currency to meet payments consistent with the purposes of the Fund until the Fund's total holdings of their .currency reach 200 percent of the quota. Where a member country i s making use of the Fund in a manner contrary to i t s purposes and policies, the Fund would give appropriate notice that i t would s e l l additional exchange to the member country only in limited amounts. Member countries holding adequate gold and exchange resources would be expected to pay for half of their exchange purchases vdth gold and countries whose official holdings of gold are adequate and are increasing would be expected to use half of the increase to repurchase part of the Fund's holdings of their currency. When the Fund's holdings of a currency become scarce, the Fund would issue a report and make recommendations designed to increase the supply of such currency. In the meantime, after consultation with the Fund, member countries would be authorized temporarily to r e s t r i c t freedom of exchange operations in the scarce currency. The Fund's resources could not be used to meet a large outflow of capital, although they could be used for capital transactions of reasonable amount. A member country could also use i t s owi resources of gold or foreign exchange for capital transactions that are in accordance with the purposes of the Fund. The par value of the currencies of member countries would be expressed in gold and could be changed only at the request of member countries. The Fund would approve a requested change in parity if i t • • •. 2 were essential to correct fundamental disequilibrium. After consultation, a member country would be permitted to change the parity of its currency by not more than 10 percent. Prompt consideration would be given to other requests for adjustment of exchange rates. The Fund would be governed by a board and an executive committee representing the members. Voting power would be closely related to quotas. A member country would withdraw from the Fund immediately by giving notice in. writing. Thereafter, the reciprocal obligations of the Fund and the country would be liquidated within a reasonable time. Member countries would not allow exchange transactions at rates outside a prescribed range based on the agreed parities. They would not be permitted to impose restrictions on payments for current international transactions, or to engage in discriminatory currency arrangements or multiple currency practices without the approval of the Fund. During the period of transition following the war, member countries would be permitted to retain their exchange controls with the expectation that these would gradually be relaxed. Three years after the establishment of the Fund any member still retaining restrictions inconsistent with these principles would consult with the Fund as to their retention. The transition period is recognized as one of change and adjustment and in deciding on requests presented by members the »Fund would give them the benefit of any reasonable doubt. 0O0 April 20,
@FedFRASER