Exchange Rates Were Declared Acceptable In The Jamaica Agreement Of The International Monetary Fund

According to its inventor J. J. Polak28, the technique of evaluating the basket of currencies was “an inevitable discovery” in a world of variable currencies. But the discovery had to be made. The EEC, which has had to deal for years with its unit of account, has never done so. It has now adopted a unit of account on the basis of a basket of Community currencies. Airlines support SDR as the basis for calculating their fares, banks float on SDRs and more and more countries link the exchange value of their currency to the SDR. CSDs thus gradually assume at least one of the roles of money, that of a unit of account. The three problems that have frightened the international monetary system at this time can be presented as follows.

First, it was found that the process of maintaining or restoring the balance of international payments if disrupted — the adjustment process, as it is called in economic jargon — was operating less and less effectively. This is largely due to a trend towards increased exchange rate rigidity under the Bretton Woods value system, which went far beyond what was initially anticipated. “In the future, the external value of the pound sterling will correspond to its internal value as defined by our own domestic policy, and not the other way around,” Lord Keynes, one of the founding fathers of the IMF, said in a speech to the House of Lords on 23 May 1944. In fact, over time, the system has evolved in a completely different direction. This compromise was only possible at the time because in the summer of 1965 General de Gaulle had decided to withdraw all French participation in the functioning of the common market in order to express his extreme dissatisfaction with the course of events. This withdrawal of France coincided by chance with the active examination of the problem of the deliberate constitution of reserves by the Monetary Committee of the European Economic Community in the autumn and winter of this year. When the French representatives returned to Brussels in the spring of 1966, a firm agreement had been reached among the other members of the EEC on the broad lines of the modalities for the creation of an international monetary reserve which could not be cancelled for the French. In addition, the Office`s haste has led to excessive pressure on countries to reconcile their positions there and then among themselves.

This happened, for example, at the Paris meeting in the autumn of 1973 and led to a hardening of national positions, which were recorded by the Bureau as non-consensual. A smoother discussion and the possibility of further reflection and consultation at home could have led to more favourable results. 26 The direction of this development is not influenced by the average decline of 17 to 18 per cent in the exchange rate of the dollar against other currencies, plus gold stocks have been valued at the official price in these calculations, as no one has been able to give them a realistic value to use in the payment of large payment imbalances. . . .