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The IMF and Gold: Funds Articles Taken to Task At Washington Meeting.


Business Editors

NEW YORK--(BUSINESS WIRE)--Sept. 27, 2001

The International Monetary Fund's attitude toward gold was examined at a special luncheon meeting hosted by the World Gold Council in Washington, D.C. today. Addressing a number of representatives of gold producing and holding countries, Dick Ware, the Council's Manager of Regulatory Affairs Regulatory Affairs (RA), also called Government Affairs, is a profession within regulated industries, such as pharmaceuticals, medical devices, energy, and banking. Regulatory Affairs professionals usually have responsibility for the following general areas:
, said that the IMF IMF

See: International Monetary Fund


IMF

See International Monetary Fund (IMF).
 should reconsider its current prohibition against using gold as an exchange rate peg, which, he said, is "anachronistic a·nach·ro·nism  
n.
1. The representation of someone as existing or something as happening in other than chronological, proper, or historical order.

2.
" and might well be damaging to some developing countries.

Mr. Ware, a former IMF and Bank of England Bank of England, central bank and note-issuing institution of Great Britain. Popularly known as the Old Lady of Threadneedle Street, its main office stands on the street of that name in London.  official, has analyzed the operation of the IMF and its use of gold since the Fund's creation in the immediate aftermath of the Second World War. His study, "The IMF and Gold," which is published by the WGC WGC World Gold Council
WGC World Golf Championship
WGC Welwyn Garden City
WGC World Gaming Center
WGC Writers Guild of Canada (Union)
WGC Whole Grains Council
WGC Wild Goose Chase
WGC Working Group Coordinator
, traces the developments in the Fund's policies and strategies from its beginning in 1946 until the collapse of the Bretton Woods system The Bretton Woods system of international monetary management established the rules for commercial and financial relations among the world's major industrial states. The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary , which culminated in the early 1970s in a deliberate attempt to write gold out of official monetary arrangements.

Mr. Ware told the Washington audience, which included IMF and World Bank representatives, that the resulting prohibition in the IMF's Articles against using gold as part of a country's exchange rate arrangements is anachronistic and should be dispensed with. For a number of countries it may be sensible to incorporate gold in a currency or commodity basket anchoring the exchange rate.

"We are not talking here about a return to an all-embracing Gold Standard. But for some countries the use, or part-use, of gold in an exchange rate peg might be beneficial. For some developing countries, especially where gold forms a significant part of their exports, establishing some sort of link to its price may make more sense than tracking the dollar and creating an exposure to the effects of US economic policy," he said.

However, such an arrangement would require a change in the IMF's Articles, which would be a "long and arduous process. But times have moved on and there is no longer any need to anathematize a·nath·e·ma·tize  
tr.v. a·nath·e·ma·tized, a·nath·e·ma·tiz·ing, a·nath·e·ma·tiz·es
To proclaim an anathema on; curse.



[Late Latin anathemat
 gold, especially if its partial use in this way might improve the economic lot of a small number of countries which need all the stability they can get."

The IMF continues to hold gold as it serves an important function in underpinning its financial strength. Mr. Ware says this is especially important today when the Fund is able to make available to members unprecedentedly large multiples of quota. Furthermore, it has remained the majority view of the Fund's members that it is better for it to retain its gold against unknown contingencies rather than to sell it and invest the proceeds elsewhere. The IMF's gold holdings have also recently been used to support the debt-relief programme for the Heavily-Indebted Poor Countries (HIPCs) and Mr. Ware argues that such activities demonstrate that gold is by no means an idle asset.

Central banks This is a list of central banks.

Contents A B C D E F G H I J K L M N O P Q R S T U V W Y Z
 are also large holders of gold and, despite some gold sales in recent years, the Years, The

the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]

See : Time
 official sector still holds some 33,000 tonnes of gold, around 25% of the world's total above ground stocks. Of this the IMF holds 3,217 tonnes, about 10% of official sector holdings and a little more than 2% of total stocks.

Mr. Ware says that while one of the reasons why so much gold is still held by the official sector reflects gold's earlier role as an explicit anchor for both domestic and international monetary systems, there is little current desire on the part of many official holders to dispose of To determine the fate of; to exercise the power of control over; to fix the condition, application, employment, etc. of; to direct or assign for a use.

See also: Dispose
 their gold. Countries such as the USA, France, Germany and Italy continue to hold significant stocks.

Gold is not a 'mere' commodity, he says. "The major economic powers continue to hold - and see value in holding - gold in their reserves. The IMF's undoubted un·doubt·ed  
adj.
Accepted as beyond question; undisputed. See Synonyms at authentic.



un·doubted·ly adv.
 credit-standing is also supported by the gold in its balance sheet. Gold gives a monetary authority a degree of freedom on a different plane from that obtained by holding reserves in foreign currencies."

"Since no one can foresee what the next 50 years will bring to the international monetary system, the ability of the IMF to respond is paramount," he says. "At that stage gold might once again become a factor and both the IMF and its members would be pleased to have retained it."

The "IMF and Gold" is essential reading for anyone interested in the activities of the gold market and the international financial system. It can be obtained from the World Gold Council at 444 Madison Ave., New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of
, NY 10022. Telephone: (212) 317-3800.

The World Gold Council is an international organization formed and funded by leading gold mining companies from around the world to monitor and analyze developments in the gold market and to encourage demand for gold.
COPYRIGHT 2001 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2001, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Business Wire
Date:Sep 27, 2001
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