Annual Report on Exchange Arrangements and Exchange Restrictions 1951

This paper discusses actions taken by members themselves, particularly for the establishment of internal financial stability, are of primary importance for the elimination of restrictions. The IMF has sought to give its support to countries faced with the practical difficulty of establishing such policies, pointing out the importance of appropriate exchange rate policies in achieving a sound international financial position and the importance of internal stability for exchange rate policy. Many member countries have now reached a point where they are re-examining more carefully not only their need for the current level of restrictions, but also the more fundamental question of reliance upon restrictions to cope with balance of payments difficulties. In the first year of IMF consultations, although some countries were applying policies designed to produce favorable conditions for the removal of restrictions, most countries were so preoccupied with their immediate problems that any substantial withdrawal of restrictions was impracticable.

This paper recognizes the difficulties and problems being faced by member countries under present circumstances and the uncertainties resulting from the strained international situation and rearmament. After the various relaxations and intensifications, there still remains a widespread use of restrictive practices by the IMF’s members. Despite some similarity between the restrictive systems of different countries, there is, as noted, a widespread diversity in the practices of IMF members. Multiple currency practices of many types and a variety of other devices are employed either in isolation or in combination. The purpose of many of the restrictions employed is to cope with balance of payments difficulties of the country imposing them. Some of the difficulties, however, are the result of measures in important export markets. Limitations on imports by one country, through exchange or trade restrictions or other devices, restrict the earnings of other countries and consequently may result in the latter restricting their payments.