Notes and Memoranda International Monetary Issues and the Developing Countries

[In academic and expert circles the question of international monetary reform has been discussed since the days of the Bretton Woods Conference. Lately it became a matter of concern to many governments when, during 1959-61, the growing demands on the US dollar led to a marked reduction in the gold stocks of the US foreign exchange reserves. Two other considerations have widened the area of interest in the problem of international monetary system. As the year for the revision of the national quotas of the International Monetary Fund drew near, a question began to be asked whether the existing arrangements would provide adequate international liquidity to meet the legitimate requirements of the rapidly * expanding demands of world trade. It was pointed out that the ratio of world foreign exchange reserves to world trade had declined from 80% in 1948 to 50% in 1964. Given pegged exchange rates and a rather slow rate of growth in gold production, it was feared that the present arrangements would not be able to meet the projected demands for international assets. The other snag was that the developing countries are plagued by a steady worsening of the terms of their trade with the developed countries and simultaneously require to import more and more for purposes of rapid development of their national economies. Currently, the discussion on international monetary issues is being carried on from the stand-points of (i) the United States, the major key-currency country, (ii) the affluent West European countries, (iii) the IMF which has an international approach and (iv) the developing countries.f As the report of the group of Experts (including Indians)—which met at the initiative of the UN Conference on Trade & Development—which was discussed in January 1966 by the UNCTAD Board of Trade & Develop-