pfg 178.
Dr. Jelle Zijlstra (1918-2001)
Source: www.bis.org/publ/arpdf/archive/ar1982_en.pdf
Note: http://www.jcaschipper.nl
Tuesday, April 30, 2013
Monday, April 22, 2013
Monetary gold wikileaks - 1975BAGHDA00001_b
1. IN HIGHLY PUBLICIZED INTERVIEW ON DECEMBER 27 RCC
VICE CHAIRMAN SADDAM HUSSEIN CALLED UPON DEVELOPING
COUNTRIES, AND PARTICULARLY OPEC COUNTRIES, TO UNITE TO
PREVENT CAPITALIST NATIONS FROM TAKING UNILATERAL ACTIONS
WITH GOLD AND INTERNATIONAL MONETARY SYSTEM TO DETRIMENT
OF DEVELOPING COUNTRIES. WHILE U.S. SINGLED OUT AS MAIN
CULPRIT BECUASE OF GOLD AUCTION, CRITICIM WAS DIRECTED AT
OTHER AS WELL. SADDAM HUSSEIN CALLED FOR MULTILATERAL
MEASURES ON GOLD AND INTERNATIONAL LIQUIDITY THROUGH
INTERNATIONAL AGREEMENT EITHER THRU SEPCIAL
INTERNATIONAL CONFERENCE OR WITHIN UN FRAMEWORK OR EXISTING
INSTITUTIONS (ASSUME TEXT IN FBIS).
2. COMMENT: STRONG GOI STATEMENT ALMOST CERTAINLY DUE IN PART TO GOI NOT TO ALLOW SHAH TO SEIZE LEADERSHIP ROLE ON GOLD ISSUE. ALTHOUGH FRENCH CHARGE HAS NOT BEEN CALLED IN BY MFA, HE BELIEVES IRAQI WARNING ADDRESSED PARTICULARLY TO FRANCE. LOWRIE
Source: https://www.wikileaks.org/plusd/cables/1975BAGHDA00001_b.html
Summary: Timeline overview
2. COMMENT: STRONG GOI STATEMENT ALMOST CERTAINLY DUE IN PART TO GOI NOT TO ALLOW SHAH TO SEIZE LEADERSHIP ROLE ON GOLD ISSUE. ALTHOUGH FRENCH CHARGE HAS NOT BEEN CALLED IN BY MFA, HE BELIEVES IRAQI WARNING ADDRESSED PARTICULARLY TO FRANCE. LOWRIE
Source: https://www.wikileaks.org/plusd/cables/1975BAGHDA00001_b.html
Summary: Timeline overview
Wednesday, April 17, 2013
Monetary gold wikileaks - 1973PARIS06020_b
FOR EUR/ WE
FUNDAMENTAL REFORM OF THE INTERNATIONAL MONETARY SYSTEM. THE BRETTON WOODS SYSTEM SERVED THE WORLD WELL FOR 25 YEARS, BUT RADICALLY CHANGING CIRCUMSTANCES, IN PARTICULAR THE EMERGENCE OF NEW ECONOMIC POWER CENTERS RIVALLING THE UNITED STATES IN IMPORTANCE, HAVE CAUSED IT TO BREAK DOWN. WE ARE NOW ENGAGED WITH OUR PARTENERS IN THE IMF IN TRYING TO BUILD A NEW SYSTEM WHICH WILL LAST AT LEAST AS LONG AND SERVE OUR INTERESTS AT LEAST AS WELL AS THE BROTTON WOODS SYSTEM.
11. THE UNITED STATES HAS MADE A NUMBER OF CONSTRUCTIVE PROPOSALS WHICH WE BELIEVE WILL MAKE A NEW MONETARY ORDER POSSIBLE. SOME OF THESE PROPOSALS HAVE BROUGHT US INTO DISAGREEMENT WITH THE FRENCH.
FOR EXAMPLE, WE BELIEVE THAT COUNTRIES THAT RUN LARGE BALANCE OF PAYMENTS SURPLUSES HAVE AS MUCH RESPONSIBILITY AS DEFICIT COUNTRIES FOR RESTORING EQUILIBRIUM TO THEIR BALANCE OF PAYMENTS. THE FRENCH, WHILE THEY HAVE MOVED SOMEWHAT CLOSER TO OUR POSITION, CONTINUE TO BELIEVE THAT PRIMARY RESPONSIBILITY RESTS WITH THE DEFICIT COUNTRY.
LIKE THE FRENCH, WE BELIEVE THAT THE NEW SYSTEM SHOULD BE BASED ON A REGIME OF STABEL EXCHANGE RATES. BUT ALSO WE BELIEVE THAT THESE CENTRAL RATES CANNOT BE DEFENDED AGAINST SPECULATIVE PRESSURES UNLESS THERE IS MUCH GREATER FREEDOM TO CHANGE THESE RATES THAN IN THE BRETTON WOODS SYSTEM EVEN, IN CERTAIN SITUATIONS, THE FREEDOM TO FLOAT. FOR THE FRENCH, ON THE OTHER HAND, THE LESS MOVEMENT OF EXCHANGE RATES, THE BETTER. FINALLY, WE BELIEVE SOME MORE SATISFACTORY ASSET THAN GOLD, WHICH IS SUBJECT TO UNCERTAINTIES OF PRODUCTION AND TO SPECULATIVE BUYING, SHOULD BECOME THE CENTRAL POINT OF REFERENCE OF THE MONETARY SYSTEM OF THE FUTURE. WE BELIEVE, IN OTHER WORDS, THAT THE IMPORTANCE OF GOLD IN THE SYSTEM SHOULD GRADUALLY DIMINISH AND THAT THE SPECIAL DRAWING RIGHT SHOULD BECOME THE CENTRAL POINT OF REFERENCE. FRANCE, ON THE OTHER HAND, BELIEVES THAT GOLD SHOULD CONTINUE TO PLAY AN IMPORTANT ROLE IN THE SYSTEM.
12. UNITED STATES INTERESTS IN THE TRADE FIELD ARE CLOSELY LINKED TO THE PREPARATIONS WHICH ARE NOW IN PROCESS FOR A MAJOR NEW ROUND OF MULTILATERAL TRADE NEGOTIATIONS SCHEDULED TO BEGIN LATER THIS YEAR. WHAT THE UNITED STATES WANTS FROM THESE NEGOTIATIONS IS A SUBSTANTIAL REDUCTION OF EXISTING BARRIERS, BOTH TARIFFS AND NON- TARIFF BARRIERS, TO WORLD TRAJE IN BOTH INDUSTRIAL AND AGRICULTURAL PRODUCTS. WE ARE PARTICULARLY INSISTENT THAT AGRICULTURE, WHICH WAS FOR ALL PRACTICAL PURPOSES EXCLUDED FROM THE KENNEDY ROUND NEGOTIATIONS, BE INCLUDED IN THE NEXT ROUND. THE UNITED STATES IS ONE OF THE MOST EFFICIENT PRODUCERS OF AGRICULTURAL COMMODITIES IN THE WORLD, AND WE BELIEVE THAT THE BARRIERS TO AGRICULTURAL TRADE WHICH HAVE BEEN EREDTED BY THE EUROPEAN COMMUNITY ARE MAKING IT IMPOSSIBLE FOR US TO REALIZE THE FULL BENEFITS OF OUR COMPARATIVE ADVANTAGE IN THIS FIELD. I HASTEN TO ADD THAT WE ARE NOT TRYING TO DESTROY THE COMMON AGRICULTURAL POLICY OF THE EUROPEAN COMMUNITY AS SOME EUROPEANS SEEM TO THINK. BUT WE BELIEVE THAT THIS POLICY CAN BE OPERATED IN WAYS THAT MAKE IT LESS HARMFUL TO THE INNTERESTS OF OTHER COUNTRIES. IT IS PRINCIPALLY OVER THE QUESTION OF LIBERALIZING TRADE IN AGRICULTURE THAT WE HAVE THE GREATEST DIFFERENCE WITH FRANCE. FRACE IS THE PRINCIPAL BENEFICIARY OF THE COMMON AGRICULTURAL POLICY OF THE EUROPEAN COMMUNITY, AND IT BELIEVES THAT ITS OWN INTERESTS ARE THREATENED BY OUR EMPHASIS ON LIBERALIZATION OF AGRICULTURAL TRADE.
13. WHAT ALL THIS MEANS IS THAT THE PROMOTION OF U. S. ECONOMIC INTERSTS IN FRANCE OVER THE NEXT YEAR OR TWO WILL CALL FOR A VERY CONSIDERABLE EFFORT TO BRIDGE THE GAP BETWEEN OUR RESPEC- TIVE POSITIONS ON MONETARY AND TRADE QUESTIONS. WE MUST SEEK TO RESTORE THE LARGE IDENTITY OF VIEWS BETWEEN OUR TWO COUNTIRES WHICH WAS A MAJOR FACTOR IN THE BRIALLIANT RECORD OF INTERNATIONAL ECONOMIC COOPERATION IN THE FIRST TWO DECADES FOLLOWING WORLD WAR II. THIS EFFORT WILL REQUIRE THE FULL USE OF ALL THE EMBASSY' S RESOURCES. WE MUST SUPPORT AND ANALYZE FRENCH POLICIES ON TRADE AND MONETARY QUESTIONS AND WE MUST EXPLAIN AND SEEK SUPPORT FOR U. S. POLICIES FROM THE FRENCH GOVERNMENT AND PUBLIC. IN OTHER WORDS, WE MUST MAINTAIN A SUSTAINED DIALOGUE WITH THE FRENCH NATION. WHILE THE DIFFERENCES BETWEEN US SOMETIMES SEEM GREAT, I AM PERSONALLY OPTIMISTIC THAT THEY WILL BE OVERCOME IN THE END, FOR I BELIEVE THAT THE THINGS THAT UNITE US - A COMMON POLITICAL HERITAGE AND CULTURAL TRADITION, A COMMON CONCERN FOR THE SECURITY OF THE ATLANTIC COMMUNITY, AND AN ALOMOST EXTRICABLE INTER- INDEPENDENCE OF ECONOMIC INTERESTS - ARE INFINITELY MORE IMPORTANT THAN THE THINGS THAT DIVIDE US.
14. I HAVE LEFT TO THE LAST WHAT IN MANY WAYS IS THE MOST IMPORTANT UNITED STATES ECONOMIC INTEREST IN FRANCE, THE PROMOTION OF U. S. EXPORTS OF GOODS AND SERVICES. EXPORT PROMOTION IS AN ACTIVITY TO WHICH THE UNITED STATES GOVERNMENT HAS ASSIGNED THE VERY HIGHEST PRIORITY. THE TASK IS A PARTICULARLY CHALLENGING ONE HERE IN FRANCE, THE FIFTH LARGEST MARKET FOR AMERICAN GOODS, BECAUSE, WHILE OUR EXPORTS TO FRANCE HAVE BEEN RISING YEAR AFTER YEAR IN ABSOLUTE TERMS, OUR SHARE OF THE FRENCH MARKET HAS BEN SLOWLY DECLINING. CONSEQUENTLY, I EXPECT TO DEVOTE A LARGE PART OF MY TIME AND ENERGY TO EXPORT PROMOTION. I VIEW THE AMERICAN BUSINESS COMMUNITY AS A DIRECT PARTNER IN THE JOB OF SELLING AMERICAN GOODS IN FRANCE, AND I WANT TO ASSURE YOU THAT IT WILL CONTINUE TO HAVE THE FULL SUPPORT OF THIS EMBASSY. FOR EXAMPLE, I INTEND TO MAINTAIN THE TRADITION OF REGULAR INFORMAL MEETINGS WITH REPRESENTATIVES OF THE BUSINESS COMMUNITY, AT WHICH MY STAFF AND I SHALL TRY TO KEEP YOU POSTED ON CURRENT U. S. POLICIES AND TO SEEK YOUR ADVICE ON CURRENT DEVELOPMENTS IN FRANCE AND EUROPE. IN ADDITION TO THESE PERIODIC MEETINGS, I INTEND TO CONTINUE MY PREDECESSOR' S OPEN- DOOR POLICY TOWARD THE AMERICAN COMMUNITY. SO THAT YOU CAN FEEL FREE TO CALL ON MY STAFF AT ANY TIME TO DISCUSS PARTICULAR PROBLEMS. IN A SENSE, ALL OF YOU ARE AMBASSADORS, FOR ALL OF YOU ARE CALLED ON FROM TIME TO TIME BY YOUR FRENCH FRIENDS TO EXPLAIN OR INTERPRET AMERICAN POLCIES WHICH THEY FIND PUZZLING OR EVEN UNFRIENDLY. I HOPE THAT THRE FRANK OPEN EXCHANGES WITH THE EMBASSY WILL HELP YOU CARRY OUT YOUR AMBASSADORIAL ROLE.
15. AND, NOW IT REMAINS ONLY FOR ME TO THANK YOU FOR YOUR GOOD WISHES AS I EMBARK ON THIS DIFFICULT AND CHALLENGING NEW ASSIGNMENT. IT IS REASSURING TO KNOW THAT YOUR COLLECTIVE WISDOM AND EXPERIENCE WILL BE AVAILABLE TO ME, AND I EXPECT TO CALL ON YOU OFTEN FOR COUNSEL AND GUIDANCE. KUBISCH
Source: https://www.wikileaks.org/plusd/cables/1973PARIS06020_b.html
Summary: Timeline overview
FUNDAMENTAL REFORM OF THE INTERNATIONAL MONETARY SYSTEM. THE BRETTON WOODS SYSTEM SERVED THE WORLD WELL FOR 25 YEARS, BUT RADICALLY CHANGING CIRCUMSTANCES, IN PARTICULAR THE EMERGENCE OF NEW ECONOMIC POWER CENTERS RIVALLING THE UNITED STATES IN IMPORTANCE, HAVE CAUSED IT TO BREAK DOWN. WE ARE NOW ENGAGED WITH OUR PARTENERS IN THE IMF IN TRYING TO BUILD A NEW SYSTEM WHICH WILL LAST AT LEAST AS LONG AND SERVE OUR INTERESTS AT LEAST AS WELL AS THE BROTTON WOODS SYSTEM.
11. THE UNITED STATES HAS MADE A NUMBER OF CONSTRUCTIVE PROPOSALS WHICH WE BELIEVE WILL MAKE A NEW MONETARY ORDER POSSIBLE. SOME OF THESE PROPOSALS HAVE BROUGHT US INTO DISAGREEMENT WITH THE FRENCH.
FOR EXAMPLE, WE BELIEVE THAT COUNTRIES THAT RUN LARGE BALANCE OF PAYMENTS SURPLUSES HAVE AS MUCH RESPONSIBILITY AS DEFICIT COUNTRIES FOR RESTORING EQUILIBRIUM TO THEIR BALANCE OF PAYMENTS. THE FRENCH, WHILE THEY HAVE MOVED SOMEWHAT CLOSER TO OUR POSITION, CONTINUE TO BELIEVE THAT PRIMARY RESPONSIBILITY RESTS WITH THE DEFICIT COUNTRY.
LIKE THE FRENCH, WE BELIEVE THAT THE NEW SYSTEM SHOULD BE BASED ON A REGIME OF STABEL EXCHANGE RATES. BUT ALSO WE BELIEVE THAT THESE CENTRAL RATES CANNOT BE DEFENDED AGAINST SPECULATIVE PRESSURES UNLESS THERE IS MUCH GREATER FREEDOM TO CHANGE THESE RATES THAN IN THE BRETTON WOODS SYSTEM EVEN, IN CERTAIN SITUATIONS, THE FREEDOM TO FLOAT. FOR THE FRENCH, ON THE OTHER HAND, THE LESS MOVEMENT OF EXCHANGE RATES, THE BETTER. FINALLY, WE BELIEVE SOME MORE SATISFACTORY ASSET THAN GOLD, WHICH IS SUBJECT TO UNCERTAINTIES OF PRODUCTION AND TO SPECULATIVE BUYING, SHOULD BECOME THE CENTRAL POINT OF REFERENCE OF THE MONETARY SYSTEM OF THE FUTURE. WE BELIEVE, IN OTHER WORDS, THAT THE IMPORTANCE OF GOLD IN THE SYSTEM SHOULD GRADUALLY DIMINISH AND THAT THE SPECIAL DRAWING RIGHT SHOULD BECOME THE CENTRAL POINT OF REFERENCE. FRANCE, ON THE OTHER HAND, BELIEVES THAT GOLD SHOULD CONTINUE TO PLAY AN IMPORTANT ROLE IN THE SYSTEM.
12. UNITED STATES INTERESTS IN THE TRADE FIELD ARE CLOSELY LINKED TO THE PREPARATIONS WHICH ARE NOW IN PROCESS FOR A MAJOR NEW ROUND OF MULTILATERAL TRADE NEGOTIATIONS SCHEDULED TO BEGIN LATER THIS YEAR. WHAT THE UNITED STATES WANTS FROM THESE NEGOTIATIONS IS A SUBSTANTIAL REDUCTION OF EXISTING BARRIERS, BOTH TARIFFS AND NON- TARIFF BARRIERS, TO WORLD TRAJE IN BOTH INDUSTRIAL AND AGRICULTURAL PRODUCTS. WE ARE PARTICULARLY INSISTENT THAT AGRICULTURE, WHICH WAS FOR ALL PRACTICAL PURPOSES EXCLUDED FROM THE KENNEDY ROUND NEGOTIATIONS, BE INCLUDED IN THE NEXT ROUND. THE UNITED STATES IS ONE OF THE MOST EFFICIENT PRODUCERS OF AGRICULTURAL COMMODITIES IN THE WORLD, AND WE BELIEVE THAT THE BARRIERS TO AGRICULTURAL TRADE WHICH HAVE BEEN EREDTED BY THE EUROPEAN COMMUNITY ARE MAKING IT IMPOSSIBLE FOR US TO REALIZE THE FULL BENEFITS OF OUR COMPARATIVE ADVANTAGE IN THIS FIELD. I HASTEN TO ADD THAT WE ARE NOT TRYING TO DESTROY THE COMMON AGRICULTURAL POLICY OF THE EUROPEAN COMMUNITY AS SOME EUROPEANS SEEM TO THINK. BUT WE BELIEVE THAT THIS POLICY CAN BE OPERATED IN WAYS THAT MAKE IT LESS HARMFUL TO THE INNTERESTS OF OTHER COUNTRIES. IT IS PRINCIPALLY OVER THE QUESTION OF LIBERALIZING TRADE IN AGRICULTURE THAT WE HAVE THE GREATEST DIFFERENCE WITH FRANCE. FRACE IS THE PRINCIPAL BENEFICIARY OF THE COMMON AGRICULTURAL POLICY OF THE EUROPEAN COMMUNITY, AND IT BELIEVES THAT ITS OWN INTERESTS ARE THREATENED BY OUR EMPHASIS ON LIBERALIZATION OF AGRICULTURAL TRADE.
13. WHAT ALL THIS MEANS IS THAT THE PROMOTION OF U. S. ECONOMIC INTERSTS IN FRANCE OVER THE NEXT YEAR OR TWO WILL CALL FOR A VERY CONSIDERABLE EFFORT TO BRIDGE THE GAP BETWEEN OUR RESPEC- TIVE POSITIONS ON MONETARY AND TRADE QUESTIONS. WE MUST SEEK TO RESTORE THE LARGE IDENTITY OF VIEWS BETWEEN OUR TWO COUNTIRES WHICH WAS A MAJOR FACTOR IN THE BRIALLIANT RECORD OF INTERNATIONAL ECONOMIC COOPERATION IN THE FIRST TWO DECADES FOLLOWING WORLD WAR II. THIS EFFORT WILL REQUIRE THE FULL USE OF ALL THE EMBASSY' S RESOURCES. WE MUST SUPPORT AND ANALYZE FRENCH POLICIES ON TRADE AND MONETARY QUESTIONS AND WE MUST EXPLAIN AND SEEK SUPPORT FOR U. S. POLICIES FROM THE FRENCH GOVERNMENT AND PUBLIC. IN OTHER WORDS, WE MUST MAINTAIN A SUSTAINED DIALOGUE WITH THE FRENCH NATION. WHILE THE DIFFERENCES BETWEEN US SOMETIMES SEEM GREAT, I AM PERSONALLY OPTIMISTIC THAT THEY WILL BE OVERCOME IN THE END, FOR I BELIEVE THAT THE THINGS THAT UNITE US - A COMMON POLITICAL HERITAGE AND CULTURAL TRADITION, A COMMON CONCERN FOR THE SECURITY OF THE ATLANTIC COMMUNITY, AND AN ALOMOST EXTRICABLE INTER- INDEPENDENCE OF ECONOMIC INTERESTS - ARE INFINITELY MORE IMPORTANT THAN THE THINGS THAT DIVIDE US.
14. I HAVE LEFT TO THE LAST WHAT IN MANY WAYS IS THE MOST IMPORTANT UNITED STATES ECONOMIC INTEREST IN FRANCE, THE PROMOTION OF U. S. EXPORTS OF GOODS AND SERVICES. EXPORT PROMOTION IS AN ACTIVITY TO WHICH THE UNITED STATES GOVERNMENT HAS ASSIGNED THE VERY HIGHEST PRIORITY. THE TASK IS A PARTICULARLY CHALLENGING ONE HERE IN FRANCE, THE FIFTH LARGEST MARKET FOR AMERICAN GOODS, BECAUSE, WHILE OUR EXPORTS TO FRANCE HAVE BEEN RISING YEAR AFTER YEAR IN ABSOLUTE TERMS, OUR SHARE OF THE FRENCH MARKET HAS BEN SLOWLY DECLINING. CONSEQUENTLY, I EXPECT TO DEVOTE A LARGE PART OF MY TIME AND ENERGY TO EXPORT PROMOTION. I VIEW THE AMERICAN BUSINESS COMMUNITY AS A DIRECT PARTNER IN THE JOB OF SELLING AMERICAN GOODS IN FRANCE, AND I WANT TO ASSURE YOU THAT IT WILL CONTINUE TO HAVE THE FULL SUPPORT OF THIS EMBASSY. FOR EXAMPLE, I INTEND TO MAINTAIN THE TRADITION OF REGULAR INFORMAL MEETINGS WITH REPRESENTATIVES OF THE BUSINESS COMMUNITY, AT WHICH MY STAFF AND I SHALL TRY TO KEEP YOU POSTED ON CURRENT U. S. POLICIES AND TO SEEK YOUR ADVICE ON CURRENT DEVELOPMENTS IN FRANCE AND EUROPE. IN ADDITION TO THESE PERIODIC MEETINGS, I INTEND TO CONTINUE MY PREDECESSOR' S OPEN- DOOR POLICY TOWARD THE AMERICAN COMMUNITY. SO THAT YOU CAN FEEL FREE TO CALL ON MY STAFF AT ANY TIME TO DISCUSS PARTICULAR PROBLEMS. IN A SENSE, ALL OF YOU ARE AMBASSADORS, FOR ALL OF YOU ARE CALLED ON FROM TIME TO TIME BY YOUR FRENCH FRIENDS TO EXPLAIN OR INTERPRET AMERICAN POLCIES WHICH THEY FIND PUZZLING OR EVEN UNFRIENDLY. I HOPE THAT THRE FRANK OPEN EXCHANGES WITH THE EMBASSY WILL HELP YOU CARRY OUT YOUR AMBASSADORIAL ROLE.
15. AND, NOW IT REMAINS ONLY FOR ME TO THANK YOU FOR YOUR GOOD WISHES AS I EMBARK ON THIS DIFFICULT AND CHALLENGING NEW ASSIGNMENT. IT IS REASSURING TO KNOW THAT YOUR COLLECTIVE WISDOM AND EXPERIENCE WILL BE AVAILABLE TO ME, AND I EXPECT TO CALL ON YOU OFTEN FOR COUNSEL AND GUIDANCE. KUBISCH
Source: https://www.wikileaks.org/plusd/cables/1973PARIS06020_b.html
Summary: Timeline overview
Tuesday, April 16, 2013
Monetary gold wikileaks - 1974LUXEMB00187_b
1. THE EMBASSY HAS OBTAINED A COPY OF THE MONETARY
COMMITTEE WORKING PAPER ON GOLD PREPARED FOR THE
APRIL 4-5 MEETING OF THE EC MONETARY COMMITTEE AND
DISTRIBUTED TO THE MARCH 22 WORKING GROUP MEETING.
THIS PAPER SUMMARIZES THE CURRENT STATE OF MONETARY
COMMITTEE DISCUSSIONS ON GOLD AND CONFIRMS REFTEL
REPORT OF MARCH 8 MONETARY COMMITTEE DISCUSSIONS.
2. ACCORDING TO MINFIN SOURCE, THE MONETARY COMMITTEE WILL ATTEMPT TO COMPLETE ITS DISCUSSIONS ON GOLD AT THE APRIL 4-5 MEETING IN ORDER TO PRESENT FINAL RECOM- MENDATIONS TO THE MINISTERS OF FINANCE (OF THE "SNAKE" CURRENCIES) MEETING IN COPENHAGEN APRIL 10.
3. AFTER GENERAL DISCUSSION OF MAJOR POINTS CON- FRONTING THE COMMITTEE, THE MOBILIZATION OF GOLD RESERVES FOR USE IN SETTLEMENTS AND THE PRICE OF GOLD TO BE USED IN THESE SETTLEMENTS, THE WORKING PAPER LISTS THE ADVAN- TAGES OF SIX OPTIONS THAT THE COMMITTEE WILL DISCUSS FURTHER AT THE APRIL 4-5 MEETING.
(A) CENTRAL BANK SALES OF GOLD ON THE FREE MARKET. AS THE REFTEL NOTES, THIS OPTION IS NOT FAVORED BECAUSE OF THE EFFECT ON THE MARKET PRICE OF GOLD. IT IS RETAINED AS A POSSIBLE ALTERNATIVE IN THE EVENT THAT OTHER OPTIONS PROVE UNACCEPTABLE.
(B) TRANSFERS OF GOLD TO THE "BRI" (PROBABLY IBRD) AGAINST DOLLARS AND OTHER MEANS OF SETTLEMENT. THE MAJOR PROBLEM OF THIS OPTION IS WHERE AND HOW THE IBRD WOULD OBTAIN THE CURRENCIES TO EXCHANGE FOR GOLD.
(C) FREE TRANSACTIONS IN GOLD AMONG CENTRAL BANKS AT FREE MARKET GOLD RATES. IN ADDITION TO BEING CONTRARY TO IMF RULES, THIS OPTION RAISES THE QUESTION OF PRICE DETERMINATION OF EACH CENTRAL BANK TRANSACTION.
(D) TRANSFERS OF GOLD TO THE EUROPEAN MONETARY FUND FOR UNITS OF ACCOUNT. THIS OPTION RAISES PROBLEMS OF EUROPEAN MONETARY INTEGRATION, THE POSSIBLE RESERVE ROLE OF THE UNIT OF ACCOUNT AND THE CONVERTIBILITY OF THE UNIT OF ACCOUNT INTO GOLD AND OTHER CURRENCIES.
(E) DISCRETIONARY TRANSACTIONS AMONG CENTRAL BANKS OF THE COMMUNITY AT LIMITED GOLD PRICES. THIS OPTION WOULD ALLOW CENTRAL BANKS TO BUY AND SELL GOLD AT MARKET RATES BETWEEN A FLOOR AND CEILING PRICE FIXED IN ADVANCE BUT WHICH COULD BE REVISED FROM TIME TO TIME.
(F) MOBILIZATION OF GOLD AS COLLATERAL FOR LOANS. THIS OPTION IS VIEWED AS HAVING THE ADVANTAGE OF OBTAINING LOANS UNDER FAVORABLE FINANCIAL CONDITIONS WHILE SUBSTITUTING IMMEDIATE LIQUIDITY FOR A "TAINTED" LIQUIDITY OF GOLD. ON THE INTERNATIONAL LEVEL, GOLD COULD BE USED AS COLLATERAL WITH THE IMF WHICH COULD THEN MAKE LOANS EITHER THROUGH ITS NORMAL CHANNELS OR BY SPECIAL OPERATIONS, I.E., IN CONJUNCTION WITH THE LI- QUIDITY OF THE PETROLEUM PRODUCING COUNTRIES. AT THE REGIONAL LEVEL, GOLD COULD BE USED FOR COLLATERAL WITH THE EUROPEAN MONETARY FUND OR THE IBRD. 4. A COPY OF THE WORKING PAPER IS BEING POUCHED TO THE DEPARTMENT AND USEC BRUSSELS. FARKAS
Source: https://www.wikileaks.org/plusd/cables/1974LUXEMB00187_b.html
2. ACCORDING TO MINFIN SOURCE, THE MONETARY COMMITTEE WILL ATTEMPT TO COMPLETE ITS DISCUSSIONS ON GOLD AT THE APRIL 4-5 MEETING IN ORDER TO PRESENT FINAL RECOM- MENDATIONS TO THE MINISTERS OF FINANCE (OF THE "SNAKE" CURRENCIES) MEETING IN COPENHAGEN APRIL 10.
3. AFTER GENERAL DISCUSSION OF MAJOR POINTS CON- FRONTING THE COMMITTEE, THE MOBILIZATION OF GOLD RESERVES FOR USE IN SETTLEMENTS AND THE PRICE OF GOLD TO BE USED IN THESE SETTLEMENTS, THE WORKING PAPER LISTS THE ADVAN- TAGES OF SIX OPTIONS THAT THE COMMITTEE WILL DISCUSS FURTHER AT THE APRIL 4-5 MEETING.
(A) CENTRAL BANK SALES OF GOLD ON THE FREE MARKET. AS THE REFTEL NOTES, THIS OPTION IS NOT FAVORED BECAUSE OF THE EFFECT ON THE MARKET PRICE OF GOLD. IT IS RETAINED AS A POSSIBLE ALTERNATIVE IN THE EVENT THAT OTHER OPTIONS PROVE UNACCEPTABLE.
(B) TRANSFERS OF GOLD TO THE "BRI" (PROBABLY IBRD) AGAINST DOLLARS AND OTHER MEANS OF SETTLEMENT. THE MAJOR PROBLEM OF THIS OPTION IS WHERE AND HOW THE IBRD WOULD OBTAIN THE CURRENCIES TO EXCHANGE FOR GOLD.
(C) FREE TRANSACTIONS IN GOLD AMONG CENTRAL BANKS AT FREE MARKET GOLD RATES. IN ADDITION TO BEING CONTRARY TO IMF RULES, THIS OPTION RAISES THE QUESTION OF PRICE DETERMINATION OF EACH CENTRAL BANK TRANSACTION.
(D) TRANSFERS OF GOLD TO THE EUROPEAN MONETARY FUND FOR UNITS OF ACCOUNT. THIS OPTION RAISES PROBLEMS OF EUROPEAN MONETARY INTEGRATION, THE POSSIBLE RESERVE ROLE OF THE UNIT OF ACCOUNT AND THE CONVERTIBILITY OF THE UNIT OF ACCOUNT INTO GOLD AND OTHER CURRENCIES.
(E) DISCRETIONARY TRANSACTIONS AMONG CENTRAL BANKS OF THE COMMUNITY AT LIMITED GOLD PRICES. THIS OPTION WOULD ALLOW CENTRAL BANKS TO BUY AND SELL GOLD AT MARKET RATES BETWEEN A FLOOR AND CEILING PRICE FIXED IN ADVANCE BUT WHICH COULD BE REVISED FROM TIME TO TIME.
(F) MOBILIZATION OF GOLD AS COLLATERAL FOR LOANS. THIS OPTION IS VIEWED AS HAVING THE ADVANTAGE OF OBTAINING LOANS UNDER FAVORABLE FINANCIAL CONDITIONS WHILE SUBSTITUTING IMMEDIATE LIQUIDITY FOR A "TAINTED" LIQUIDITY OF GOLD. ON THE INTERNATIONAL LEVEL, GOLD COULD BE USED AS COLLATERAL WITH THE IMF WHICH COULD THEN MAKE LOANS EITHER THROUGH ITS NORMAL CHANNELS OR BY SPECIAL OPERATIONS, I.E., IN CONJUNCTION WITH THE LI- QUIDITY OF THE PETROLEUM PRODUCING COUNTRIES. AT THE REGIONAL LEVEL, GOLD COULD BE USED FOR COLLATERAL WITH THE EUROPEAN MONETARY FUND OR THE IBRD. 4. A COPY OF THE WORKING PAPER IS BEING POUCHED TO THE DEPARTMENT AND USEC BRUSSELS. FARKAS
Source: https://www.wikileaks.org/plusd/cables/1974LUXEMB00187_b.html
Monetary gold wikileaks - 1974TOKYO02909_b
PASS TREASURY AND FEDERAL RESERVE
1. MOF OFFICIAL (SYOHTEN) CALLED FINATT TO DENY MORNING PRESS STORY MAR 5 THAT MOF "PLANS TO SUPPORT RAISING THE OFFICIAL GOLD PRICE." OFFICIAL SAID CATEGORICALLY MOF HAS REACHED NO REPEAT NO DECISION AS YET WHETHER GOJ SHOULD RESIST OR FAVOR ALTERING OFFICIAL PRICE OF GOLD. MOF IS, HOWEVER, STUDYING PROPOSALS ADVANCED IN OTHER COUNTRIES, INCLUDING U.S. (CONGRESSMAN REUSS), FOR ALTERING PRESENT OFFICIAL PRICE OF GOLD.
2. LEAD STORY IN MORNING NEIHON KEIZEI MAR 5 HEADLINED "FINANCE MINISTRY PLANS TO SUPPORT GOLD PRICE RISE." FOLLOWING IS FULL ENGLISH TRANSLATION OF ARTICLE.
3"THE GOLD PROBLEM AGAIN LOOMED IN IMPORTANCE (ALONG WITH STEPS TOWARD INTERNATIONAL MONETARY REFORM). PARTICULARLY SINCE EC BEGAN EXAMINING RAISING THE PRICE OF GOLD IN ORDER TO MAKE GOLD SETTLEMENT BETWEEN THEIR MEMBERS. ON MAR 4 MOF CODIFIED ITS BASIC THOUGHTS ON THIS GOLD PRICE PROBLEM. THE ELEMENTS OF THOSE THOUGHTS ARE (1) AGREEMENT IN PRINCIPLE WITH EC MOVES TOWARD RAISING THE PRICE OF GOLD FOR SETTLING DEBTS WITHIN THE EC AND WITH OUTSIDERS, (2) HOWEVER, SINCE THE CURRENT FREE MARKET PRICE OF GOLD HAS BEEN UNREASON- ABLY RAISED AS RESULT OF SPECULATIVE INFLUENCES, A NEW PRICE FOR OFFICIAL GOLD TRANSACTIONS SHOULD BE SET BELOW THE MARKET PRICE, AND (3) RAISING THE OFFICIAL GOLD PRICE SHOULD FOLLOW AFTER ESTABLISHMENT OF THE VALUE OF TH SDR. THE MOF VIEWS TAKE INTO ACCOUNT CHANGES IN GOLD POLICY VIEWS IN OTHER COUNTRIES FOLLOWING THE OIL CRISIS. ACCORDING TO JAPAN'S WAY OF THINKING, IF THE OFFICIAL PRICE OF GOLD IS RAISED, THE EXISTING PRICE (OF $42.22 PER OUNCE) WILL HAVE NO SUBSTANCE AND IT MAY WELL LEAD TO A FLOATING OFFICIAL PRICE FOR GOLD.
4. "FEARS OF INTERNATIONAL ISOLATION. THE MAJOR REASON MOF IS REVERSIING ITS STAND FROM THE AMERICAN POSITION, WHICH OPPOSES ABOLISHING A FIXED GOLD DOLLAR RATE AS WELL AS RAISING THE PRICE OF GOLD, AND SUPPORT- ING EC ADVOCACY OF A RISE IN THE GOLD PRICE, IS ATTRIBUTED TO THE CHANGING SITUATION BROUGHT ABOUT BY THE OIL CRISIS. IN PARTICULAR, SINCE THE PROPOSAL OF CONGRESSMAN REUSS TO 'ABOLISH THE OFFICIAL GOLD PRICE,' JAPAN HAS BEEN INCLINED TO BELIEVE THAT IF SHE CONTINUES TO ADHERE TO THE POSITION OF OPPOSING A RISE IN THE GOLD PRICE, SHE MIGHT BE ISOLATED INTER- NATIONALLY WITH RESPECT TO THE GOLD PROBLEM. ALSO, JAPAN IS TENDING TO BELIEVE THAT FOR THE EC COUNTRIES, INCLUDING FRANCE, WHICH ARE FEARFUL ABOUT THEIR BALANCE OF PAYMENTS SITUATION BECAUSE OF RISING OIL PRICES, A MOST REALISTIC MEANS OF SOLVING THEIR PAYMENTS CRISIS IS TO RAISE THE PRICE OF THEIR OFFICIAL GOLD HOLDINGS TO ENSURE DEBT SETTLEMENTS WITHIN THE EC. BUT AT THE SAME TIME IT CANNOT BE DENIED THAT, IF THE OFFICIAL GOLD PRICE IS RAISED BY A BIG MARGIN AND THERE IS A TENDENCY FOR GOLD SETTLEMENT TO TAKE PLACE BILATERALLY AND WITHIN SPECIFIC AREAS, THE IMPRESSION WOULD BE CREATED THAT THE AGREEMENT REACHED AT THE IMF'S NAIROBI MEETING FOR REDUCING THE ROLE OF GOLD IN THE FUTURE MONETARY SYSTEM AND MAKE THE SDR THE PRIMARY RESERVE ASSET, WOULD BE TEMPORARILY SUSPENDED. HOWEVER, MOF VIEW IS THAT IF THE MONETARY AUTHORITIES CONTINUE TO PROHIBIT GOLD TRANSACTIONS ABOVE THE OFFICIAL PRICE IN THE FACE OF ESCALATED FREE MARKET GOLD PRICES, SETTLEMENTS IN GOLD BETWEEN MONETARY AUTHORITIES WILL BE INHIBITED AND THE FEAR EXISTS THAT THE PROBLEM OF MAKING SETTLEMENTS BETWEEN EC COUNTRIES, WHICH HAVE LARGE GOLD HOLDINGS, WILL BECOME EVEN MORE SERIOUS AS A RESULT OF THE OIL CRITIS. FROM THE ABOVE ANALYSIS MOF, IN PRINCIPLE, SUPPORTS RAISING THE GOLD PRICE, AND IF OTHER MONETARY AUTHORITIES WISH TO SELL GOLD TO JAPAN, SHE MIGHT ACCEPT, IF THE CONDITIONS WERE RIGHT. HOWEVER, AS TO THE EXTENT OF INCREASING THE OFFICIAL GOLD PRICE, MOF IS STILL QUITE CAUTIOUS BELIEVING THAT ANY INCREASE SHOULD BE RESTRAINED SO AS NOT TO STIMULATE INCREASES IN THE FREE MARKET PRICE AND GOLD PRODUCTION. ACCORDING TO INFORMATION RECEIVED SO FAR BY JAPAN, EC IS EXAMINING TWO PLANS FOR RAISING THE GOLD PRICE, NAMELY (1) ABOLISHING THE PRESENT OFFICIAL PRICE AND TAKING THE MARKET PRICE ONLY, AND (2) SO AS NOT TO OVERSTIMULATE MARKET SPECULATION E E E E E E E E
Source: https://www.wikileaks.org/plusd/cables/1974TOKYO02909_b.html
Summary: Timeline overview
1. MOF OFFICIAL (SYOHTEN) CALLED FINATT TO DENY MORNING PRESS STORY MAR 5 THAT MOF "PLANS TO SUPPORT RAISING THE OFFICIAL GOLD PRICE." OFFICIAL SAID CATEGORICALLY MOF HAS REACHED NO REPEAT NO DECISION AS YET WHETHER GOJ SHOULD RESIST OR FAVOR ALTERING OFFICIAL PRICE OF GOLD. MOF IS, HOWEVER, STUDYING PROPOSALS ADVANCED IN OTHER COUNTRIES, INCLUDING U.S. (CONGRESSMAN REUSS), FOR ALTERING PRESENT OFFICIAL PRICE OF GOLD.
2. LEAD STORY IN MORNING NEIHON KEIZEI MAR 5 HEADLINED "FINANCE MINISTRY PLANS TO SUPPORT GOLD PRICE RISE." FOLLOWING IS FULL ENGLISH TRANSLATION OF ARTICLE.
3"THE GOLD PROBLEM AGAIN LOOMED IN IMPORTANCE (ALONG WITH STEPS TOWARD INTERNATIONAL MONETARY REFORM). PARTICULARLY SINCE EC BEGAN EXAMINING RAISING THE PRICE OF GOLD IN ORDER TO MAKE GOLD SETTLEMENT BETWEEN THEIR MEMBERS. ON MAR 4 MOF CODIFIED ITS BASIC THOUGHTS ON THIS GOLD PRICE PROBLEM. THE ELEMENTS OF THOSE THOUGHTS ARE (1) AGREEMENT IN PRINCIPLE WITH EC MOVES TOWARD RAISING THE PRICE OF GOLD FOR SETTLING DEBTS WITHIN THE EC AND WITH OUTSIDERS, (2) HOWEVER, SINCE THE CURRENT FREE MARKET PRICE OF GOLD HAS BEEN UNREASON- ABLY RAISED AS RESULT OF SPECULATIVE INFLUENCES, A NEW PRICE FOR OFFICIAL GOLD TRANSACTIONS SHOULD BE SET BELOW THE MARKET PRICE, AND (3) RAISING THE OFFICIAL GOLD PRICE SHOULD FOLLOW AFTER ESTABLISHMENT OF THE VALUE OF TH SDR. THE MOF VIEWS TAKE INTO ACCOUNT CHANGES IN GOLD POLICY VIEWS IN OTHER COUNTRIES FOLLOWING THE OIL CRISIS. ACCORDING TO JAPAN'S WAY OF THINKING, IF THE OFFICIAL PRICE OF GOLD IS RAISED, THE EXISTING PRICE (OF $42.22 PER OUNCE) WILL HAVE NO SUBSTANCE AND IT MAY WELL LEAD TO A FLOATING OFFICIAL PRICE FOR GOLD.
4. "FEARS OF INTERNATIONAL ISOLATION. THE MAJOR REASON MOF IS REVERSIING ITS STAND FROM THE AMERICAN POSITION, WHICH OPPOSES ABOLISHING A FIXED GOLD DOLLAR RATE AS WELL AS RAISING THE PRICE OF GOLD, AND SUPPORT- ING EC ADVOCACY OF A RISE IN THE GOLD PRICE, IS ATTRIBUTED TO THE CHANGING SITUATION BROUGHT ABOUT BY THE OIL CRISIS. IN PARTICULAR, SINCE THE PROPOSAL OF CONGRESSMAN REUSS TO 'ABOLISH THE OFFICIAL GOLD PRICE,' JAPAN HAS BEEN INCLINED TO BELIEVE THAT IF SHE CONTINUES TO ADHERE TO THE POSITION OF OPPOSING A RISE IN THE GOLD PRICE, SHE MIGHT BE ISOLATED INTER- NATIONALLY WITH RESPECT TO THE GOLD PROBLEM. ALSO, JAPAN IS TENDING TO BELIEVE THAT FOR THE EC COUNTRIES, INCLUDING FRANCE, WHICH ARE FEARFUL ABOUT THEIR BALANCE OF PAYMENTS SITUATION BECAUSE OF RISING OIL PRICES, A MOST REALISTIC MEANS OF SOLVING THEIR PAYMENTS CRISIS IS TO RAISE THE PRICE OF THEIR OFFICIAL GOLD HOLDINGS TO ENSURE DEBT SETTLEMENTS WITHIN THE EC. BUT AT THE SAME TIME IT CANNOT BE DENIED THAT, IF THE OFFICIAL GOLD PRICE IS RAISED BY A BIG MARGIN AND THERE IS A TENDENCY FOR GOLD SETTLEMENT TO TAKE PLACE BILATERALLY AND WITHIN SPECIFIC AREAS, THE IMPRESSION WOULD BE CREATED THAT THE AGREEMENT REACHED AT THE IMF'S NAIROBI MEETING FOR REDUCING THE ROLE OF GOLD IN THE FUTURE MONETARY SYSTEM AND MAKE THE SDR THE PRIMARY RESERVE ASSET, WOULD BE TEMPORARILY SUSPENDED. HOWEVER, MOF VIEW IS THAT IF THE MONETARY AUTHORITIES CONTINUE TO PROHIBIT GOLD TRANSACTIONS ABOVE THE OFFICIAL PRICE IN THE FACE OF ESCALATED FREE MARKET GOLD PRICES, SETTLEMENTS IN GOLD BETWEEN MONETARY AUTHORITIES WILL BE INHIBITED AND THE FEAR EXISTS THAT THE PROBLEM OF MAKING SETTLEMENTS BETWEEN EC COUNTRIES, WHICH HAVE LARGE GOLD HOLDINGS, WILL BECOME EVEN MORE SERIOUS AS A RESULT OF THE OIL CRITIS. FROM THE ABOVE ANALYSIS MOF, IN PRINCIPLE, SUPPORTS RAISING THE GOLD PRICE, AND IF OTHER MONETARY AUTHORITIES WISH TO SELL GOLD TO JAPAN, SHE MIGHT ACCEPT, IF THE CONDITIONS WERE RIGHT. HOWEVER, AS TO THE EXTENT OF INCREASING THE OFFICIAL GOLD PRICE, MOF IS STILL QUITE CAUTIOUS BELIEVING THAT ANY INCREASE SHOULD BE RESTRAINED SO AS NOT TO STIMULATE INCREASES IN THE FREE MARKET PRICE AND GOLD PRODUCTION. ACCORDING TO INFORMATION RECEIVED SO FAR BY JAPAN, EC IS EXAMINING TWO PLANS FOR RAISING THE GOLD PRICE, NAMELY (1) ABOLISHING THE PRESENT OFFICIAL PRICE AND TAKING THE MARKET PRICE ONLY, AND (2) SO AS NOT TO OVERSTIMULATE MARKET SPECULATION E E E E E E E E
Source: https://www.wikileaks.org/plusd/cables/1974TOKYO02909_b.html
Summary: Timeline overview
Monday, April 15, 2013
Monetary gold wikileaks - 1974ECBRU01531_b
1. SUMMARY: THE MISSION HAS LEARNED FROM RELIABLE
EC SOURCES THAT THE MONETARY COMMITTEE DISCUSSED THE
ADVANTAGES AND DISADVANTAGES OF SEVERAL SOLUTIONS
FOR USING GOLD IN INTERNATIONAL PAYMENTS. WHILE THE
COMMITTEE DREW NO CONCLUSIONS, THE GROUP SEEMED TO
RULE OUT THE FIXINGOF A NEW GOLD PRICE AND GAVE CONSIDERABLE SUPPORT TO THE SOLUTION INVOLVING IMF
LOANS AGAINST GOLD AS COLLATERAL. THE COMMITTEE
WILL TRY TO NARROW DOWN THE OPTIONS FURTHER AT ITS
NEXT MEETING APRIL 4-5, AFTER A BRIEF DISCUSSSION,
THE COMMITTEE NOTED THAT THE RECYCLING PROBLEM WAS
NO LONGER URGENT BUT THAT IT SHOULD CONTINUE TO BE
STUDIED QUIETLY. END SUMMARY.
2. MOST OF THE MEETING WAS DEVOTED TO GOLD. THE DISCUSSIONS CENTERED AROUND THE FUNDAMENTAL PROBLEM OF HOW THE COMMUNITY COULD USE GOLD IN THE MOST ADVANTAGEOUS WAY IN MAKEING SETTLEMENTS BOTH WITHIN THE COMMUNITY AND BETWEEN THE COMMUNITY AND THE OUTSIDE WORLD. IT WAS GENERALLY ACCEPTED THAT ANY SOLUTION SHOULD BE AS WIDE AS POSSIBLE GEOGRAPHICALLY AND THAT A PURELY REGIONAL APPROACH WOULD BE OF LITTLE USE IN ENABLING THE COMMUNITY TO PAY EXTERNAL DEBTS ARISING FROM THE HIGHER COST OF OIL IMPORTS.
3. ONE POSSIBLILITY MENTIONED WAS THE SALE OF GOLD ON THE FREE MARKET. THIS SOLUTION WAS JUDGED UNSATISFACTORY TO CENTRAL BANKS DUE TO THE NARROWNESS OF THE MARKET AND, THUS, THE EFFECT THAT SUCH SALES WOULD HAVE ON THE GOLD PRICE. THE COMMUNITY ALSO CONSIDERED DIRECT CENTRAL BANK GOLD TRANSACTIONS AT MARKET-RELATED PRICES. IT WAS NOTED THAT SUCH TRANSACTIONS WOULD BE CONTRARY TO GHE ARTICLES OF AGREEMENT OF THE IMF, ALTHOUGH THIS WAS NOT JUDGED A SERIOUS PROBLEM SINCE OTHER ARTICLES OF THE IMF ARE CURRENTLY BEING VIOLATED. THE VIEW WAS EXPRESSED THAT THIS PROBLEM COULD BE OVERCOME THROUGH A POLICY STATEMENT BY THE IMF RESULTING IN DE FACTO SUSPENSION OF ARTICLE IV, SECTION 2. 4. ON THE ASSUMPTION THAT CENTRAL BANKS WOULD BE UNWILLING TO BUY OR SELL GOLD ON THE FREE MARKET, ANOTHER OPTION CONSIDERED WAS THE USE OF GOLD AS COLLATERAL FOR LOANS GRANTED BY THE IMF. COUNTRIES DEPOSITING GOLD WITH THE IMF WORLD BE ISSUED A COUNTER- PART IN SDRS. IT WAS NOTED THAT SUCH A SOLOUTION WOULD REQUIRE A DECISION ON THE VALUATION AND INTEREST RATE OF THE SDR. ON BALANCE, THIS OPTION WAS JEDGED THE BEST OF THOSE CONSIDRED.
5. A VARIATION ON THE IMF OPTION WOULD BE THE ISSUANCE BY THE EUROPEAN MONETARY COOPERATION FUND OF EUROPEAN UNITS OF ACCOUNT AGAINST GOLD DEPOSITS (1 UAC EQUALS $1.2063). ANY COUNTRY WISHING TO COULD DEPOSIT GOLD WITH THE FUND. THIS OPTION, HOWEVER, WOULD IMPLY MAJOR DECISIONS ABOUT RESERVE POOLING WITHIN THE COMMUNITY AS WELL AS THE ROLE AND VALUATION OF THE UNIT OF ACCOUNT, WHICH IS CURRENTLY MERELY AN ACCOUNTING DEVICE. WHAT WOULD BE THE UAC'S VALVUE IN RELATION TO GOLD AND OTHER CURRENCIES? WOULD THE UAC BECOME A RESERVE CURRENCY? ASSUMING THE FUND COULD ISSUE UACS AGAINST GOLD ONLY, WOULD IT HAVE TO SELL GOLD ON THE FREE MARKET IF THE ENTIRE COMMUNITY WAS IN DEFICIT? THE COMMITTEE GENERALLY THOUGHT THIS OPTION LESS ATTRACTIVE THAN THE ONE INVOLVING THE IMF.
6. ANOTHER POSSIBLITY DISCUSSED WAS AGREEMENT BY CENTRAL BANKS TO ABSTAIN FROM SELLING GOLD BELOW A CERTAIN PRICE OR PURCHASING IT ABOVE A CERTAIN PRICE. BETWEEN THE TWO PRICES. GOLD WOULD FLUCTUATE ACCORDING TO MARKET FORCES. SUCH AN ARRANGEMENT BY ALLOWING USE OF GOLD IN TRANSACTIONS WITH THIRD COUNTRIES WITHOUT ITS USE BEIG OBLIGATORY IN INTRA-EC PAYMENTS--PRESUMABLY ITS FLUCTUTATING VALUE WOULD MAKE IT AN UNSATISFACTORY MEANS OF SETTLEMENT WITHIN THE EC, THOUGH THIS POINT IS UNCLEAR. INTRA-COMMUNITY SETTLEMENTS WOULD BE IN DOLLARS, AND THE DOLLAR WOULD AGAIN BECOME THE INTER- VENTION CURRENCY. COUNTRIIS WITH FLOATING CURRENCIES WOULD THUS BE ABLE TO PARTICIPATE IN THE EC'S MONETARY ARRANGEMENTS WITHOUT THE OBLIGATION TO SETTLE IN GOLD OR GOLD-RELATED ASSETS. AT THE SAME TIME, THE COMMITTEE FULLY RECOGNIZED THAT THIS OPTION RAISED THE QUESTION OF THE NEED FOR OBLIGATORY INTERVENTION TO KEEP GOLD WITHIN THE AGREED MARGIN. THERE WOULD HAVE TO BE RUELES FOR SUCH INTERVENTION, AND THESE WOULD HAVE TO BE KEPT SECRET. AT THE LIMIT TTHIS OPTION WOULD APPROXIMATE RESTORATION OF THE GOLD POOL AND A FIXED PRICE FOR GOLD, BOTH OF WHICH WERE RULED OUT.
7. THE ATTITUDES OF INDIVIDUAL MEMBER STATES WERE ALONG FAMILIAR LINES. MOST INTERESTED IN FIINDING A SOLUTIION WERE FRANCE AND ITALY, BELGIUM TO A LESSER EXTENT, WITH DENMARK MILDLY INTERESTED. THE GERMANS INDICATED GENERAL RELUCTANCE TO CEDE DOLLARS FOR GOLD. OUR SOURCES SAID THE FRG, WITH NO BALANCE OF PAYMENTS PROBLEMS AT PRESENT, WAS PROBABLY WORRIED ABOUT THE INFLATIONARY EFFECT OF A GENERALIZED REVALUATION OF WORLD GOLD RESERVES. THE GERMANS ALSO MIGHT NOT WISH TO BE OBLIGED TO BUY GOLD UNDER CERTAIN CIRCUMSTANCES, PRESUMABLY BECAUSE THEY HAVE DOUBTS ABOUT ITS LONG-TERM VALUE. ACCORDING TO OUR SOURCES, HOWEVER, THEY WOULD NOT OPPOSE A BROAD EC ARRANGEMENT IN AN INTERNATIONAL CONTEXT.
8. THE OPTIONS DISCUSSED BY THE MONETARY COMMITTEE WILL BE FURTHER NARROWED DOWN FOR THE COMMITTEE'S NEXT MEETING APRIL 4-5. IN THE MEANTIME, THE COMMITTEE EXPECTS THE DISCUSSIONS TO BE PRUSED AT THE WORKING LEVEL WITH THE IMF.
9. RECYCLING. THE COMMITTEE DISCUSSED BRIEFLY THE QUES- TION OF RECYCLING FUNDS ACCUMLATED BY OIL PRODUCERS. IT WAS GENERALLY BELIEVED THAT THE PROBLEM WAS NO LONGER URGENT--PRIMARILY BECAUSE SOME COUNTRIES HAD ALREADY HELPED THEMSELVES IN THE MARKET, WHICH SO FAR HAD STOOD THE TEST. IT WAS ALSO NOTIED THAT BANKS, THROUGH THEIR INFORMAL CONTACTS, HAD ARRANGED IN PRACTICE A QUEUING UP OF BORROWERS, SO THAT RATES HAD REMAINED RELATIVELY STABLE. FOR CONTINGENCY PRUPOSES, HOWEVER, THE COMMITTEE AGREED THAT SOME SORT OF EUROPEAN ARRANGEMENT INVOLVING BORROWING VIA THE MONETARY CO E E E E E E E E
Source: https://www.wikileaks.org/plusd/cables/1974ECBRU01531_b.html
Summary: Timeline overview
2. MOST OF THE MEETING WAS DEVOTED TO GOLD. THE DISCUSSIONS CENTERED AROUND THE FUNDAMENTAL PROBLEM OF HOW THE COMMUNITY COULD USE GOLD IN THE MOST ADVANTAGEOUS WAY IN MAKEING SETTLEMENTS BOTH WITHIN THE COMMUNITY AND BETWEEN THE COMMUNITY AND THE OUTSIDE WORLD. IT WAS GENERALLY ACCEPTED THAT ANY SOLUTION SHOULD BE AS WIDE AS POSSIBLE GEOGRAPHICALLY AND THAT A PURELY REGIONAL APPROACH WOULD BE OF LITTLE USE IN ENABLING THE COMMUNITY TO PAY EXTERNAL DEBTS ARISING FROM THE HIGHER COST OF OIL IMPORTS.
3. ONE POSSIBLILITY MENTIONED WAS THE SALE OF GOLD ON THE FREE MARKET. THIS SOLUTION WAS JUDGED UNSATISFACTORY TO CENTRAL BANKS DUE TO THE NARROWNESS OF THE MARKET AND, THUS, THE EFFECT THAT SUCH SALES WOULD HAVE ON THE GOLD PRICE. THE COMMUNITY ALSO CONSIDERED DIRECT CENTRAL BANK GOLD TRANSACTIONS AT MARKET-RELATED PRICES. IT WAS NOTED THAT SUCH TRANSACTIONS WOULD BE CONTRARY TO GHE ARTICLES OF AGREEMENT OF THE IMF, ALTHOUGH THIS WAS NOT JUDGED A SERIOUS PROBLEM SINCE OTHER ARTICLES OF THE IMF ARE CURRENTLY BEING VIOLATED. THE VIEW WAS EXPRESSED THAT THIS PROBLEM COULD BE OVERCOME THROUGH A POLICY STATEMENT BY THE IMF RESULTING IN DE FACTO SUSPENSION OF ARTICLE IV, SECTION 2. 4. ON THE ASSUMPTION THAT CENTRAL BANKS WOULD BE UNWILLING TO BUY OR SELL GOLD ON THE FREE MARKET, ANOTHER OPTION CONSIDERED WAS THE USE OF GOLD AS COLLATERAL FOR LOANS GRANTED BY THE IMF. COUNTRIES DEPOSITING GOLD WITH THE IMF WORLD BE ISSUED A COUNTER- PART IN SDRS. IT WAS NOTED THAT SUCH A SOLOUTION WOULD REQUIRE A DECISION ON THE VALUATION AND INTEREST RATE OF THE SDR. ON BALANCE, THIS OPTION WAS JEDGED THE BEST OF THOSE CONSIDRED.
5. A VARIATION ON THE IMF OPTION WOULD BE THE ISSUANCE BY THE EUROPEAN MONETARY COOPERATION FUND OF EUROPEAN UNITS OF ACCOUNT AGAINST GOLD DEPOSITS (1 UAC EQUALS $1.2063). ANY COUNTRY WISHING TO COULD DEPOSIT GOLD WITH THE FUND. THIS OPTION, HOWEVER, WOULD IMPLY MAJOR DECISIONS ABOUT RESERVE POOLING WITHIN THE COMMUNITY AS WELL AS THE ROLE AND VALUATION OF THE UNIT OF ACCOUNT, WHICH IS CURRENTLY MERELY AN ACCOUNTING DEVICE. WHAT WOULD BE THE UAC'S VALVUE IN RELATION TO GOLD AND OTHER CURRENCIES? WOULD THE UAC BECOME A RESERVE CURRENCY? ASSUMING THE FUND COULD ISSUE UACS AGAINST GOLD ONLY, WOULD IT HAVE TO SELL GOLD ON THE FREE MARKET IF THE ENTIRE COMMUNITY WAS IN DEFICIT? THE COMMITTEE GENERALLY THOUGHT THIS OPTION LESS ATTRACTIVE THAN THE ONE INVOLVING THE IMF.
6. ANOTHER POSSIBLITY DISCUSSED WAS AGREEMENT BY CENTRAL BANKS TO ABSTAIN FROM SELLING GOLD BELOW A CERTAIN PRICE OR PURCHASING IT ABOVE A CERTAIN PRICE. BETWEEN THE TWO PRICES. GOLD WOULD FLUCTUATE ACCORDING TO MARKET FORCES. SUCH AN ARRANGEMENT BY ALLOWING USE OF GOLD IN TRANSACTIONS WITH THIRD COUNTRIES WITHOUT ITS USE BEIG OBLIGATORY IN INTRA-EC PAYMENTS--PRESUMABLY ITS FLUCTUTATING VALUE WOULD MAKE IT AN UNSATISFACTORY MEANS OF SETTLEMENT WITHIN THE EC, THOUGH THIS POINT IS UNCLEAR. INTRA-COMMUNITY SETTLEMENTS WOULD BE IN DOLLARS, AND THE DOLLAR WOULD AGAIN BECOME THE INTER- VENTION CURRENCY. COUNTRIIS WITH FLOATING CURRENCIES WOULD THUS BE ABLE TO PARTICIPATE IN THE EC'S MONETARY ARRANGEMENTS WITHOUT THE OBLIGATION TO SETTLE IN GOLD OR GOLD-RELATED ASSETS. AT THE SAME TIME, THE COMMITTEE FULLY RECOGNIZED THAT THIS OPTION RAISED THE QUESTION OF THE NEED FOR OBLIGATORY INTERVENTION TO KEEP GOLD WITHIN THE AGREED MARGIN. THERE WOULD HAVE TO BE RUELES FOR SUCH INTERVENTION, AND THESE WOULD HAVE TO BE KEPT SECRET. AT THE LIMIT TTHIS OPTION WOULD APPROXIMATE RESTORATION OF THE GOLD POOL AND A FIXED PRICE FOR GOLD, BOTH OF WHICH WERE RULED OUT.
7. THE ATTITUDES OF INDIVIDUAL MEMBER STATES WERE ALONG FAMILIAR LINES. MOST INTERESTED IN FIINDING A SOLUTIION WERE FRANCE AND ITALY, BELGIUM TO A LESSER EXTENT, WITH DENMARK MILDLY INTERESTED. THE GERMANS INDICATED GENERAL RELUCTANCE TO CEDE DOLLARS FOR GOLD. OUR SOURCES SAID THE FRG, WITH NO BALANCE OF PAYMENTS PROBLEMS AT PRESENT, WAS PROBABLY WORRIED ABOUT THE INFLATIONARY EFFECT OF A GENERALIZED REVALUATION OF WORLD GOLD RESERVES. THE GERMANS ALSO MIGHT NOT WISH TO BE OBLIGED TO BUY GOLD UNDER CERTAIN CIRCUMSTANCES, PRESUMABLY BECAUSE THEY HAVE DOUBTS ABOUT ITS LONG-TERM VALUE. ACCORDING TO OUR SOURCES, HOWEVER, THEY WOULD NOT OPPOSE A BROAD EC ARRANGEMENT IN AN INTERNATIONAL CONTEXT.
8. THE OPTIONS DISCUSSED BY THE MONETARY COMMITTEE WILL BE FURTHER NARROWED DOWN FOR THE COMMITTEE'S NEXT MEETING APRIL 4-5. IN THE MEANTIME, THE COMMITTEE EXPECTS THE DISCUSSIONS TO BE PRUSED AT THE WORKING LEVEL WITH THE IMF.
9. RECYCLING. THE COMMITTEE DISCUSSED BRIEFLY THE QUES- TION OF RECYCLING FUNDS ACCUMLATED BY OIL PRODUCERS. IT WAS GENERALLY BELIEVED THAT THE PROBLEM WAS NO LONGER URGENT--PRIMARILY BECAUSE SOME COUNTRIES HAD ALREADY HELPED THEMSELVES IN THE MARKET, WHICH SO FAR HAD STOOD THE TEST. IT WAS ALSO NOTIED THAT BANKS, THROUGH THEIR INFORMAL CONTACTS, HAD ARRANGED IN PRACTICE A QUEUING UP OF BORROWERS, SO THAT RATES HAD REMAINED RELATIVELY STABLE. FOR CONTINGENCY PRUPOSES, HOWEVER, THE COMMITTEE AGREED THAT SOME SORT OF EUROPEAN ARRANGEMENT INVOLVING BORROWING VIA THE MONETARY CO E E E E E E E E
Source: https://www.wikileaks.org/plusd/cables/1974ECBRU01531_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974PARIS05438_b
1. SUMMARY. IN INTERVIEW PUBLISHED BY LE MONDE DATED MARCH 5,
ECONOMICS MINISTER GISCARD D' ESTAING CONVERED VARIOUS EXTERNAL
FINANCIAL QUESTIONS, INCLUDING OUTLOOK FOR EUROPEAN MONETARY
UNION, GOLD AND RECYCLING OF SURPLUSES ACCRUING TO OIL-PRODUCING
COUNTRIES. HE EXPANDED ON THOUGHT EXPRESSED PREVIOUSLY (PARA 4,
PARIS 3608) THAT EUROPEAN COOPERATION ON EXCHANGE RATE POLICY
DID NOT NECESSARILY HAVE TO INVOLVE PRESENT "SNAKE" TECHNIQUE, AND OUTLINED THREE ALTERNATIVES FRENCH WERE STUDYING. HE MADE
TRADITIONAL FRENCH PLUG FOR ARRANGEMENT TO REVALUE MONETARY
GOLD STOCKS, WHICH COULD THEN BE USED IN INTRA-EUROPEAN SETTLEMENTS
AND WHICH MIGHT ALSO RELEASE OFFICIAL EUROPEAN FOREIGN EXCHANGE
HOLDINGS FOR USE IN SETTLING EXTRA-EUROPEAN DEFICITS OF EUROPEAN
COUNTRIES. UNDER HEADING OF RECYCLING, HE SUGGESTED EUROPE
SHOULD MAKE AN EFFORT TO PERSUADE OIL-PRODUCING COUNTRIES TO
HOLD PART OF THEIR RESERVES IN EUROPEAN CURRENCIES. END SUMMARY.
2. MONTHLY EUROPEAN ECONOMIC SUPPLEMENT WHICH LE MONDE PUBLISHES JOINTLY WITH LA STAMPA, THE TIMES AND DIE WELT, DATED MARCH 5, CARRIES INTERVIEW WITH FRENCH ECONOMICS MINISTER GISCARD D' ESTAING ON VARIOUS EXTERNAL FINANCIAL QUESTIONS. FOLLOWING IS RESUME OF GISCARD' S PRINCIPAL COMMENTS.
3. EUROPEAN MONETARY UNION. -GISCARD AGAIN SAID FRANCE WAS PREPARED TO EXAMINE WITH EC PARTNERS WHAT FORM EUROPEAN MONETARY COOPERATION MIGHT TAKE FOLLOWING SIX-MONTH PERIOD WHICH FRANCE HAS SET AS LIMIT FOR FRANC FLOAT. HE REITERATED THAT EUROPEAN MONETARY "SNAKE" IN ITS PRESENT FORM WAS NOT THE ONLY POSSIBILITY, AND PERHAPS NOT THE MOST APPROPRIATE, GIVEN PRESENT WIDESPREAD CURRENCY FLOATING. FRENCH WERE STUDYING FOLLOWING ALTERNATIVES:
(A) EACH EC COUNTRY MIGHT UNDERTAKE TO MAINTAIN SPECIFIED MARGINS FOR ITS OWN CURRENCY, BUT THESE MARGINS MIGHT VARY FROM COUNTRY TO COUNTRY IN FUNCTION OF DIFFERING ECONOMIC AND BUSINESS CONDITIONS.
(B) 2.25 PERCENT MARGIN MIGHT BE KEPT AS GENERAL RULE, BUT CENTRAL BANKS, WITHOUT ANY PUBLIC ANNOUNCEMENT, MIGHT SUSPEND THE RULE FOR CERTAIN CURRENCIES DURING CERTAIN PERIODS.
(C) INSTEAD OF REQUIRING COUNTRIES TO INTERVENE ONLY WHEN THEIR CURRENCIES WERE AT OUTSIDE LIMITS OF .../...STONE "SNAKE," INTERVENTION MIGHT BE DIRECTED TOWARDS THE MIDPOINT OF THE "SNAKE." THUS, ALL PARTICIPATING COUNTRIES WOULD BE CALLED UPON TO ACT IN DEFENSE OF "SNAKE" AND NOT JUST THOSE WITH STRONGEST AND WEAKEST CURRENCIES.
4. GOLD.
(A) ANOTHER DIFFICULTY IN PROPER FUNCTIONING OF "SNAKE" HAS BEEN FACT THAT AT ITS PRESENT OFFICIAL VALUE, GOLD IS NOT AVAILABLE FOR INTRA-EUROPEAN SETTLEMENTS. THIS IS WHY SOME STEP TO REACTIVATE MONETARY GOLD IS FUNDAMENTAL QUESTION FOR EUROPE. EVERYBODY, INCLUDING FRANCE, PREFERS WORLD-WIDE SETTLEMENT OF THIS QUESTION IN AGREEMENT WITH U.S. IF THAT IS NOT POSSIBLE, HOWEVER, SOMETHING MUST BE DONE ON EUROPEAN BASIS.
(B) ON SUBSTANCE OF QUESTION, FRANCE DOES NOT FAVOR RETURN TO GOLD STANDARD. OBJECTIVE IS RATIONAL MONETARY SYSTEM IN WHICH GOLD WILL HAVE A ROLE SO LONG AS THAT RATIONALITY IS NOT COMPLETE. BEST PROOF THAT GOLD STILL HAS A ROLE TO PALY IS FACT THAT ITS MOST DETERMINED OPPONENTS, SUCH AS U.S.; GERMANY AND ITALY, ARE NOT WILLING TO LET LOOSE OF ANY OF THEIR GOLD. FRENCH POSITION IS NOT THAT A NEW CONVENTIONAL PRICE SHOULD BE FIXED FOR GOLD AND THAT THIS NEW CONVENTIONAL PRICE SHOULD BE FUTURE STANDARD FOR MONETARY SYSTEM. RATHER, IT IS THAT THERE SHOULD BE A POSSIBILITY FOR GOLD SETTLEMENTS AMONG CENTRAL BANKS, WHICH WOULD EXCHANGE GOLD AMONG THEMSELVES "LIKE A MONETARY RAW MATERIAL."
(C) COUNTRIES WOULD BE LESS CONCERNED ABOUT LOSING A PART OF THEIR FOREIGN EXCHANGE RESERVES IF THEIR GOLD RESERVES WERE REVALUED. THUS, GERMANY COULD ACQUIRE GOLD FROM ITS EUROPEAN PARTNERS AGAINST FOREIGN EXCHANGE, AND EUROPE WOULD SETTLE ITS 1974 EXTERNAL DEFICIT IN FOREIGN EXCHANGE WITHOUT DECREASING ITS TOTAL GOLD STOCK
5. RECYCLING.
- IT IS NORMAL THAT PART OF SURPLUSES ACCRUING TO OIL-EXPORTING COUNTRIES SHOULD BE CHANNELED TO IMF AND IBRD FOR USE IN HELPING COUNTRIES WITH PAYMENTS DIFFICULTIES. IT IS ALSO NORMAL THAT PART OF THESE SURPLUSES SHOULD BE CHANNELED THROUGH EURO- DOLLAR MARKET. HOWEVER, FRANCE WANTS EC TO ADDRESS THIS MATTER IN COORDINATED FASHION, AND OTHER MEMBER COUNTRIES SEEM TO BE COMING ROUND TO THAT VIEWPOINT. "FOR OIL-PRODUCING COUNTRIES, IDEA OF HAVING PART OF THEIR RESERVES INVESTED IN FORM OF CLAIM ON EUROPE, CARRYING CORRESPONDING GUARANTEES AND YIELD, MIGHT WELL BE ATTRACTIVE TO THEM. AS DISEQUILIBRIUM IN OUR BALANCE OF PAYMENTS IS TEMPORARY, AND AS VERY LARGE SURPLUSES OF OIL-PRODUCING COUNTRIES ARE ALSO TEMPORARY, THE IDEA FOR THEM TO BUILD UP RESERVE HOLDINGS IN EUROPEAN CURRENCIES IS SOMETHING WHICH PRESENTS GREAT DEAL OF INTEREST. THERE ARE TECHNICAL PROBLEMS WHICH HAVE NOT YET BEEN WORKED OUT: THERE MIGHT BE ARRANGEMENTS FOR MULTIPLE CURRENCY OPTION. BUT IDEA THAT EVERY YEAR EITHER THE GROUP OF EUROPEAN CENTRAL BANKS OR MONETARY COOPERATION FUND WOULD FLOAT A LOAN OF MIDDLE SIZED DIMENSIONS, THAT IS, A FEW BILLION DOLLARS, OPEN NOT TO PRIVATE PARTIES, BUT TO CENTRAL BANKS OF OIL-PRODUCING COUNTRIES, APPEARS TO ME TO BE POSITIVE IDEA. WE ARE GOING TO TRY TO ADVANCE IT." STONE
Source: https://www.wikileaks.org/plusd/cables/1974PARIS05438_b.html
Summary: Timeline overview
2. MONTHLY EUROPEAN ECONOMIC SUPPLEMENT WHICH LE MONDE PUBLISHES JOINTLY WITH LA STAMPA, THE TIMES AND DIE WELT, DATED MARCH 5, CARRIES INTERVIEW WITH FRENCH ECONOMICS MINISTER GISCARD D' ESTAING ON VARIOUS EXTERNAL FINANCIAL QUESTIONS. FOLLOWING IS RESUME OF GISCARD' S PRINCIPAL COMMENTS.
3. EUROPEAN MONETARY UNION. -GISCARD AGAIN SAID FRANCE WAS PREPARED TO EXAMINE WITH EC PARTNERS WHAT FORM EUROPEAN MONETARY COOPERATION MIGHT TAKE FOLLOWING SIX-MONTH PERIOD WHICH FRANCE HAS SET AS LIMIT FOR FRANC FLOAT. HE REITERATED THAT EUROPEAN MONETARY "SNAKE" IN ITS PRESENT FORM WAS NOT THE ONLY POSSIBILITY, AND PERHAPS NOT THE MOST APPROPRIATE, GIVEN PRESENT WIDESPREAD CURRENCY FLOATING. FRENCH WERE STUDYING FOLLOWING ALTERNATIVES:
(A) EACH EC COUNTRY MIGHT UNDERTAKE TO MAINTAIN SPECIFIED MARGINS FOR ITS OWN CURRENCY, BUT THESE MARGINS MIGHT VARY FROM COUNTRY TO COUNTRY IN FUNCTION OF DIFFERING ECONOMIC AND BUSINESS CONDITIONS.
(B) 2.25 PERCENT MARGIN MIGHT BE KEPT AS GENERAL RULE, BUT CENTRAL BANKS, WITHOUT ANY PUBLIC ANNOUNCEMENT, MIGHT SUSPEND THE RULE FOR CERTAIN CURRENCIES DURING CERTAIN PERIODS.
(C) INSTEAD OF REQUIRING COUNTRIES TO INTERVENE ONLY WHEN THEIR CURRENCIES WERE AT OUTSIDE LIMITS OF .../...STONE "SNAKE," INTERVENTION MIGHT BE DIRECTED TOWARDS THE MIDPOINT OF THE "SNAKE." THUS, ALL PARTICIPATING COUNTRIES WOULD BE CALLED UPON TO ACT IN DEFENSE OF "SNAKE" AND NOT JUST THOSE WITH STRONGEST AND WEAKEST CURRENCIES.
4. GOLD.
(A) ANOTHER DIFFICULTY IN PROPER FUNCTIONING OF "SNAKE" HAS BEEN FACT THAT AT ITS PRESENT OFFICIAL VALUE, GOLD IS NOT AVAILABLE FOR INTRA-EUROPEAN SETTLEMENTS. THIS IS WHY SOME STEP TO REACTIVATE MONETARY GOLD IS FUNDAMENTAL QUESTION FOR EUROPE. EVERYBODY, INCLUDING FRANCE, PREFERS WORLD-WIDE SETTLEMENT OF THIS QUESTION IN AGREEMENT WITH U.S. IF THAT IS NOT POSSIBLE, HOWEVER, SOMETHING MUST BE DONE ON EUROPEAN BASIS.
(B) ON SUBSTANCE OF QUESTION, FRANCE DOES NOT FAVOR RETURN TO GOLD STANDARD. OBJECTIVE IS RATIONAL MONETARY SYSTEM IN WHICH GOLD WILL HAVE A ROLE SO LONG AS THAT RATIONALITY IS NOT COMPLETE. BEST PROOF THAT GOLD STILL HAS A ROLE TO PALY IS FACT THAT ITS MOST DETERMINED OPPONENTS, SUCH AS U.S.; GERMANY AND ITALY, ARE NOT WILLING TO LET LOOSE OF ANY OF THEIR GOLD. FRENCH POSITION IS NOT THAT A NEW CONVENTIONAL PRICE SHOULD BE FIXED FOR GOLD AND THAT THIS NEW CONVENTIONAL PRICE SHOULD BE FUTURE STANDARD FOR MONETARY SYSTEM. RATHER, IT IS THAT THERE SHOULD BE A POSSIBILITY FOR GOLD SETTLEMENTS AMONG CENTRAL BANKS, WHICH WOULD EXCHANGE GOLD AMONG THEMSELVES "LIKE A MONETARY RAW MATERIAL."
(C) COUNTRIES WOULD BE LESS CONCERNED ABOUT LOSING A PART OF THEIR FOREIGN EXCHANGE RESERVES IF THEIR GOLD RESERVES WERE REVALUED. THUS, GERMANY COULD ACQUIRE GOLD FROM ITS EUROPEAN PARTNERS AGAINST FOREIGN EXCHANGE, AND EUROPE WOULD SETTLE ITS 1974 EXTERNAL DEFICIT IN FOREIGN EXCHANGE WITHOUT DECREASING ITS TOTAL GOLD STOCK
5. RECYCLING.
- IT IS NORMAL THAT PART OF SURPLUSES ACCRUING TO OIL-EXPORTING COUNTRIES SHOULD BE CHANNELED TO IMF AND IBRD FOR USE IN HELPING COUNTRIES WITH PAYMENTS DIFFICULTIES. IT IS ALSO NORMAL THAT PART OF THESE SURPLUSES SHOULD BE CHANNELED THROUGH EURO- DOLLAR MARKET. HOWEVER, FRANCE WANTS EC TO ADDRESS THIS MATTER IN COORDINATED FASHION, AND OTHER MEMBER COUNTRIES SEEM TO BE COMING ROUND TO THAT VIEWPOINT. "FOR OIL-PRODUCING COUNTRIES, IDEA OF HAVING PART OF THEIR RESERVES INVESTED IN FORM OF CLAIM ON EUROPE, CARRYING CORRESPONDING GUARANTEES AND YIELD, MIGHT WELL BE ATTRACTIVE TO THEM. AS DISEQUILIBRIUM IN OUR BALANCE OF PAYMENTS IS TEMPORARY, AND AS VERY LARGE SURPLUSES OF OIL-PRODUCING COUNTRIES ARE ALSO TEMPORARY, THE IDEA FOR THEM TO BUILD UP RESERVE HOLDINGS IN EUROPEAN CURRENCIES IS SOMETHING WHICH PRESENTS GREAT DEAL OF INTEREST. THERE ARE TECHNICAL PROBLEMS WHICH HAVE NOT YET BEEN WORKED OUT: THERE MIGHT BE ARRANGEMENTS FOR MULTIPLE CURRENCY OPTION. BUT IDEA THAT EVERY YEAR EITHER THE GROUP OF EUROPEAN CENTRAL BANKS OR MONETARY COOPERATION FUND WOULD FLOAT A LOAN OF MIDDLE SIZED DIMENSIONS, THAT IS, A FEW BILLION DOLLARS, OPEN NOT TO PRIVATE PARTIES, BUT TO CENTRAL BANKS OF OIL-PRODUCING COUNTRIES, APPEARS TO ME TO BE POSITIVE IDEA. WE ARE GOING TO TRY TO ADVANCE IT." STONE
Source: https://www.wikileaks.org/plusd/cables/1974PARIS05438_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974PARIS04616_b
FOLLOWING ARE COMMENTS ON RANGE OF ISSUES LISTED IN
REFTEL. MATERIAL IN REPLY TO EACH SPECIFIC QUESTION
IS GROUPED UNDER SAME PARAGRAPH NUMBER AS THAT
ASSIGNED TO QUESTION IN REFTEL.
1. FRENCH EXCHANGE RATE POLICY UNDERWENT MAJOR CHANGE IN JANUARY, WHEN FRANCE DECIDED WITHDRAW FROM EUROPEAN MONETARY "SNAKE" AND ALLOW FRANC TO FLOAT INDEPENDENTLY FOR PERIOD OF SIX MONTHS. PARIS 1654, PARIS 1928, PARIS 1998, PARIS 2757, PARIS A-70, PARIS 3283, PARIS 3412, PARIS 3609 AND PARIS A-96 ARE ALL ADDRESSED, EITHER WHOLLY OR IN PART, TO THIS DECISION, ITS ORIGINS AND ITS LIKELY CONSEQUENCES. THERE IS SOME AMBIGUITY IN FRENCH GOVT'S EXPLANATIONS OF WHAT IT HOPES TO ACCOMPLISH THROUGH INDEPENDENT FLAT. ON THE ONE HAND, OFFICIAL SPOKESMEN HAVE STATED THAT FLOAT WOULD PROMOTE HIGH PRIORITY OBJECTIVE OF MAXI- MIZING EXPORTS; YET THIS RESULT COULD COME ABOUT ONLY IF FLOAT LED TO SOME SIGNIFICANT DEGREE OF DEPRECI- ATION OF FRENCH FRANC AGAINST CURRENCIES OF FRANCE'S MAJOR TRADING PARTNERS. ON THE OTHER HAND, OFFICIAL SPOKESMEN HAVE DENIED THAT FLOAT WAS DESIGNED TO BRING ABOUT DISGUISED DEVALUATION OR ACHIEVE TRADE ADVANTAGE THROUGH EXCHANGE RATE MANIPULATION. MOREOVER, THIS POINT HAS BEEN MORE HEAVILY STRESSED THAN MATTER OF EXPORTS, THUS, FRENCH SEEM TO BE SAYING THAT THEY WOULD BE SATISIFIED WITH A RATE STRUCTURE FOR FLOATING FRANC THAT WAS SIMILAR TO THE ONE PREVAILING ON EVE OF FLOAT DECISION, PROVIDED THIS STRUCTURE DID NOT HAVE TO BE MAINTAINED AT COST OF HEAVY RESERVE LOSSES. INDEED, FINANCE MINISTER HAS, IN SEVERAL RECENT PUBLIC STATEMENTS, POINTED WITH SATISFACTION TO RECENT APPRECIATION OF FRANC AGAINST DOLLAR. ONE IMPORTANT CONSIDERATION HERE IS THE EFFECT SUCH APPRECIATION HAS OF HOLDING DOWN FRANC VALUE OF DOLLAR-DENOMINATED OIL IMPORT BILL. ON THE DOWNSIDE, BOTH FRENCH TREASURY AND BANK OF FRANCE OFFICIALS HAVE INDICATED TO US AWARENESS THAT TOO SHARP A DEPRECIATION OF FRANC WOULD PRODUCE POLITI- CALLY, ECONOMICALLY AND SOCIALLY UNACCEPTABLE CONSE- QUENCES IN FRANCE.
2. DEPARTURE OF FRENCH FROM "SNAKE" SIGNIFIES THAT FRENCH AUTHORITIES ARE NOT WILLING, IN FACE OF UNDERTAIN PAYMENTS OUTLOOK, TO GO ON SPENDING RESERVES TO MAINTAIN PUBLICLY SPECIFIED FIXED RATE RELATION- SHIP, EVEN BETWEEN FRANC AND LIMITED NUMBER OF CURRENCIES. FINANCE MINISTER HAS STATED THAT THEY WOULD INTERVENE, HOWEVER, TO MAINTAIN ORDERLY MARKET CONDITIONS, AND DURING FIRST WEEK OF INDEPENDENT FLOAT (JAN 21-25) THEY FED AN ESTIMATED $450 OR $500 MILLION INTO MARKET FOR THAT PURPOSE. IF TRADE AND CURRENT ACCOUNT DEFICITS DEVELOP IN 1974 ON SCALE NOW EXPECTED, OFFICIAL INTERVENTION WILL DOUBTLESS BE NECESSARY FROM TIME TO TIME TO ASSURE MARKET EQUILIBRIUM. FOR THIS, MONETARY AUTHORITIES WILL CERTAINLY DRAW FIRST UPON "BORROWED RESERVES," SUCH AS PROCEEDS OF RECENT 1.5 BILLION EURO-DOLLAR BORROWING BY FRENCH TREASURY. OUR GUESS -- BUT IT IS ONLY A GUESS -- WOULD BE THAT FRANCE WOULD BE QUITE READY TO ABSORB SIGNIFICANT AMOUNTS OF RESERVES TO ARREST ANY SUSTAINED UPWARD MOVEMENT OF FRANC, ESPECIALLY BEARING IN MIND SUB- STANTIAL RESERVE LOSSES THEY HAVE SUFFERED SINCE MID-1973 RESERVE PEAK (ABOUT $3.3 BILLION). IN MONTHLY TV APPEARANCE IN MID-FEB, FINANCE MINISTERY SAID THAT BANK OF FRANCE HAD BOUGHT ABOUT $60 MILLION DURING LAST WEEK OF JAN AND FIRST HALF OF FEB. (SEE ALSO PARAGRAPH 1 ABOVE.)
3. ALTHOUGH FINANCE MINISTER HAS SPOKEN PUBLICLY AT GREAT LENGTH ON SEVERAL OCCASIONS IN RECENT WEEKS ABOUT VARIOUS ASPECTS OF C-20 NEGOTIATIONS, WE DO NOT BELIEVE HE HAS EVEN TOUCHED ON QUESTION OF INTERNATIONAL RULES FOR FLOATING. FRENCH TREASURY DIRECTOR (WHO IS ALSO FRENCH C-20 DEPUTY) HAS TOLD US PRIVATELY THAT DESPITE DECISION TO FLOAT FRANC, FRENCH HOLD TO THEIR LONGSTANDING POSITION THAT MONETARY REFORM SHOULD PROVIDE FOR MAXIMUM DEGREE OF RATE STABILITY, WITH MINIMUM EMPHASIS ON FLOATING. ON ACCASION OF THIS DISCUSSION, WE TRIED TO GET HIM TO INDICATE FRENCH THINKING ABOUT WHAT WOULD BE APPRO- PRIATE RULES FOR FLOATING, BUT HE DUCKED. THIS PROBABLY MEANS THAT FRENCH HAVE NOT YET HAMMERED OUT ANY WELL-DEFINED POSITION ON THE MATTER.
4. FRENCH MONETARY POLICY IS VERY TIGHT AND LIKELY TO REMAIN SO FOR SOME TIME. FIRST, MONETARY POLICY IS ONE OF PRINCIPAL INSTRUMENTS OF FRENCH ANTI-INFLATIONARY PROGRAM. SECOND, FRENCH HOPE THAT BY MAINTAINING TIGHT MONEY AND HIGH INTEREST RATES IN FRANCE, THEY CAN ATTRACT CAPITAL INFLOWS TO HELP OFFSET ANTICIPATED CURRENT ACCOUNT DEFICIT (SEE PARIS A-70). THESE STRINGENT MONETARY CONDITIONS MAY WELL SPUR FRENCH INDUSTRY TO LOOK FOR FUNDS OUTSIDE FRANCE. HOWEVER, WE BELIEVE MAJOR PORTION OF EXTERNAL BORROWING WILL BE ACCOMPLISHED THROUGH DIRECT ACTIONS OF FRENCH TREASURY. THIS IS CASE OF 1.5 BILLION EURO- DOLLAR BORROWING THAT HAS ALREADY TAKEN PLACE. TREASURY IS ALSO "COUNSELING" LARGE NATIONALIZED ENTER- PRISES TO BORROW ABROAD. DELOUVIER, HEAD OF ELECTRICITE DE FRANCE, RECENTLY TOLD US THAT TREASURY WAS SO PRESS- ING EDF, AND YESTERDAY IT WAS ANNOUNCED THAT EDF IS CONTRACTING 500 MILLION EURO-DOLLAR BANK LOAN WITH CONDITIONS VERY SIMILAR TO RECENT TREASURY OPERATION. NATIONAL TELECOMMUNICATIONS FUND, WHICH FINANCES EXPAN- SION OF FRENCH TELEPHONE NETWORK, AND SNCF (RAILROADS) ARE BOTH SEEKING TO FLOAT IN U.S. MARKET BOND ISSUES CARRYING FRENCH GOVT GUARANTEE. APPARENTLY, ONE QUES- TION WHICH THESE PROSPECTIVE BORROWERS HAVE RAISED WITH FRENCH AUTHORITIES IS PROTECTION AGAINST EXCHANGE RISKS ON THESE DOLLAR-DENOMINATED LIABILITIES.
5. REFERENCES CITED IN PARAGRAPH 1 ABOVE CONTAIN CONSIDERABLE MATERIAL RE FRENCH POSITION ON GOLD. IN ADDITION, SEE PARIS 29343, PARIS 29366 AND PARIS 30004 FOR VIEWS EXPRESSED BY FRENCH OFFICIALS FOLLOW- ING LAST NOVEMBER'S DECISION TO TERMINATE 1968 WASH- INGTON GOLD AGREEMENT.
6. ON CONCRETE STEPS TAKEN OR CONTEMPLATED TO REDUCE IMPACT OF OIL PRICE RISE ON CURRENCY AND TRADE RELATIONSHIPS, FLOAT AND EXTERNAL BORROWING ARE DIS- CUSSED ABOVE. IN ADDITION, FRENCH HAVE MADE OVERTURES TO A NUMBER OF OIL -EXPORTING COUNTRIES WITH A VIEW TO WORKING OUT BILATERAL DEALS WITH THEM. AS EXPLAINED TO US BY DIRECTOR OF ECONOMIC AFFAIRS, MFA, PURPOSE OF THESE EFFORTS IS NOT TO NAIL DOWN OIL SUPPLIES, BUT RATHER TO SELL GOODS IN ORDER TO HELP PAY FOR OIL (PARA 7, PARIS 4181). WITH EXCEPTION OF NEAR-TERM CONTRACT WITH SAUDI ARABIA (30 MILLION TONS OVER THREE YEARS), THESE ARRANGEMENTS ARE ALL STILL IN THE "IN PRINCIPLE" STAGE. MOREOVER, THERE ARE REPORTS THAT FINANCE MINISTER DISCARD D'ESTAING IS UNHAPPY ABOUT BILATERAL APPROACH PUSHED BY FOREIGN MINISTER JOBERT. GISCARD SUPPOSEDLY FEARS IT COULD COMMIT TO BUYING OIL OVER CONSIDERABLE PERIOD AT UNREASONABLE PRICES. SECOND, PRIME MINISTER HAS AN- NOUNCED NEW STEPS WILL BE TAKEN IN MARCH TO ECONOMIZE FRENCH CONSUMPTION OF ENERGY. FINALLY, FINANCE MINISTER HAS SEVERAL TIMES SAID HE WOULD ANNOUNCE IN LATE WINTER OR EARLY SPRING SERIES OF MEASURES TO STIMULATE EXPORTS. SO FAR, ONLY STEP MENTIONED OFFI- CIALLY IS SOME IMPROVEMENT IN EXPORT CREDIT INSURANCE MECHANISM. PRESS REPORTS SAY THAT FINANCE MINISTRY IS ALSO STUDYING POSSIBILITY OF ACCELERATED DEPRECI- TION ALLOWANCE FOR FIRMS THAT ACHIEVE SPECIFIED EXPORT TARGETS. ON TRADE PROMOTION FRONT, MINISTER HAS SAID IN SEVERAL RECENT PUBLIC STATEMENTS THAT IN ADDITION TO MARKET OF OIL PRODUCERS, FRANCE SHOULD MAKE SPECIAL EFFORT TO IMPROVE ITS POSITION IN U.S. AND OTHER NORTH AMERICAN MARKETS AND IN MARKETS OF OTHER COUNTRIES THAT ARE LARGE-SCALE EXPORTERS OF PRIMARY PRODUCTS.
7. IN THEIR NUMEROUS PUBLIC PRONOUNCEMENTS RE INCIDENCE OF OIL PRICES ON WORLD PAYMENTS SITUATION, FRENCH OFFICIAL SPOKESMEN HAVE CURIOUSLY NOT ADDRESSED QUESTION OF RECYCLING OIL REVENUES AND SPECIAL FINAN- CIAL ARRANGEMENTS TO MITIGATE IMPACT OF INCREASED OIL PRICES ON LDCS. REPORT CIRCULATING IN PARIS AT TIME OF C-20 MINISTERIAL MEETING IN ROME WERE TO EFFECT THAT FINANCE MINISTER GISCARD D'ESTAING KEPT QUIET DURING C-20 DISCUSSION OF THESE TOPICS. IRWIN
Source: https://www.wikileaks.org/plusd/cables/1974PARIS04616_b.html
Summary: Timeline overview
1. FRENCH EXCHANGE RATE POLICY UNDERWENT MAJOR CHANGE IN JANUARY, WHEN FRANCE DECIDED WITHDRAW FROM EUROPEAN MONETARY "SNAKE" AND ALLOW FRANC TO FLOAT INDEPENDENTLY FOR PERIOD OF SIX MONTHS. PARIS 1654, PARIS 1928, PARIS 1998, PARIS 2757, PARIS A-70, PARIS 3283, PARIS 3412, PARIS 3609 AND PARIS A-96 ARE ALL ADDRESSED, EITHER WHOLLY OR IN PART, TO THIS DECISION, ITS ORIGINS AND ITS LIKELY CONSEQUENCES. THERE IS SOME AMBIGUITY IN FRENCH GOVT'S EXPLANATIONS OF WHAT IT HOPES TO ACCOMPLISH THROUGH INDEPENDENT FLAT. ON THE ONE HAND, OFFICIAL SPOKESMEN HAVE STATED THAT FLOAT WOULD PROMOTE HIGH PRIORITY OBJECTIVE OF MAXI- MIZING EXPORTS; YET THIS RESULT COULD COME ABOUT ONLY IF FLOAT LED TO SOME SIGNIFICANT DEGREE OF DEPRECI- ATION OF FRENCH FRANC AGAINST CURRENCIES OF FRANCE'S MAJOR TRADING PARTNERS. ON THE OTHER HAND, OFFICIAL SPOKESMEN HAVE DENIED THAT FLOAT WAS DESIGNED TO BRING ABOUT DISGUISED DEVALUATION OR ACHIEVE TRADE ADVANTAGE THROUGH EXCHANGE RATE MANIPULATION. MOREOVER, THIS POINT HAS BEEN MORE HEAVILY STRESSED THAN MATTER OF EXPORTS, THUS, FRENCH SEEM TO BE SAYING THAT THEY WOULD BE SATISIFIED WITH A RATE STRUCTURE FOR FLOATING FRANC THAT WAS SIMILAR TO THE ONE PREVAILING ON EVE OF FLOAT DECISION, PROVIDED THIS STRUCTURE DID NOT HAVE TO BE MAINTAINED AT COST OF HEAVY RESERVE LOSSES. INDEED, FINANCE MINISTER HAS, IN SEVERAL RECENT PUBLIC STATEMENTS, POINTED WITH SATISFACTION TO RECENT APPRECIATION OF FRANC AGAINST DOLLAR. ONE IMPORTANT CONSIDERATION HERE IS THE EFFECT SUCH APPRECIATION HAS OF HOLDING DOWN FRANC VALUE OF DOLLAR-DENOMINATED OIL IMPORT BILL. ON THE DOWNSIDE, BOTH FRENCH TREASURY AND BANK OF FRANCE OFFICIALS HAVE INDICATED TO US AWARENESS THAT TOO SHARP A DEPRECIATION OF FRANC WOULD PRODUCE POLITI- CALLY, ECONOMICALLY AND SOCIALLY UNACCEPTABLE CONSE- QUENCES IN FRANCE.
2. DEPARTURE OF FRENCH FROM "SNAKE" SIGNIFIES THAT FRENCH AUTHORITIES ARE NOT WILLING, IN FACE OF UNDERTAIN PAYMENTS OUTLOOK, TO GO ON SPENDING RESERVES TO MAINTAIN PUBLICLY SPECIFIED FIXED RATE RELATION- SHIP, EVEN BETWEEN FRANC AND LIMITED NUMBER OF CURRENCIES. FINANCE MINISTER HAS STATED THAT THEY WOULD INTERVENE, HOWEVER, TO MAINTAIN ORDERLY MARKET CONDITIONS, AND DURING FIRST WEEK OF INDEPENDENT FLOAT (JAN 21-25) THEY FED AN ESTIMATED $450 OR $500 MILLION INTO MARKET FOR THAT PURPOSE. IF TRADE AND CURRENT ACCOUNT DEFICITS DEVELOP IN 1974 ON SCALE NOW EXPECTED, OFFICIAL INTERVENTION WILL DOUBTLESS BE NECESSARY FROM TIME TO TIME TO ASSURE MARKET EQUILIBRIUM. FOR THIS, MONETARY AUTHORITIES WILL CERTAINLY DRAW FIRST UPON "BORROWED RESERVES," SUCH AS PROCEEDS OF RECENT 1.5 BILLION EURO-DOLLAR BORROWING BY FRENCH TREASURY. OUR GUESS -- BUT IT IS ONLY A GUESS -- WOULD BE THAT FRANCE WOULD BE QUITE READY TO ABSORB SIGNIFICANT AMOUNTS OF RESERVES TO ARREST ANY SUSTAINED UPWARD MOVEMENT OF FRANC, ESPECIALLY BEARING IN MIND SUB- STANTIAL RESERVE LOSSES THEY HAVE SUFFERED SINCE MID-1973 RESERVE PEAK (ABOUT $3.3 BILLION). IN MONTHLY TV APPEARANCE IN MID-FEB, FINANCE MINISTERY SAID THAT BANK OF FRANCE HAD BOUGHT ABOUT $60 MILLION DURING LAST WEEK OF JAN AND FIRST HALF OF FEB. (SEE ALSO PARAGRAPH 1 ABOVE.)
3. ALTHOUGH FINANCE MINISTER HAS SPOKEN PUBLICLY AT GREAT LENGTH ON SEVERAL OCCASIONS IN RECENT WEEKS ABOUT VARIOUS ASPECTS OF C-20 NEGOTIATIONS, WE DO NOT BELIEVE HE HAS EVEN TOUCHED ON QUESTION OF INTERNATIONAL RULES FOR FLOATING. FRENCH TREASURY DIRECTOR (WHO IS ALSO FRENCH C-20 DEPUTY) HAS TOLD US PRIVATELY THAT DESPITE DECISION TO FLOAT FRANC, FRENCH HOLD TO THEIR LONGSTANDING POSITION THAT MONETARY REFORM SHOULD PROVIDE FOR MAXIMUM DEGREE OF RATE STABILITY, WITH MINIMUM EMPHASIS ON FLOATING. ON ACCASION OF THIS DISCUSSION, WE TRIED TO GET HIM TO INDICATE FRENCH THINKING ABOUT WHAT WOULD BE APPRO- PRIATE RULES FOR FLOATING, BUT HE DUCKED. THIS PROBABLY MEANS THAT FRENCH HAVE NOT YET HAMMERED OUT ANY WELL-DEFINED POSITION ON THE MATTER.
4. FRENCH MONETARY POLICY IS VERY TIGHT AND LIKELY TO REMAIN SO FOR SOME TIME. FIRST, MONETARY POLICY IS ONE OF PRINCIPAL INSTRUMENTS OF FRENCH ANTI-INFLATIONARY PROGRAM. SECOND, FRENCH HOPE THAT BY MAINTAINING TIGHT MONEY AND HIGH INTEREST RATES IN FRANCE, THEY CAN ATTRACT CAPITAL INFLOWS TO HELP OFFSET ANTICIPATED CURRENT ACCOUNT DEFICIT (SEE PARIS A-70). THESE STRINGENT MONETARY CONDITIONS MAY WELL SPUR FRENCH INDUSTRY TO LOOK FOR FUNDS OUTSIDE FRANCE. HOWEVER, WE BELIEVE MAJOR PORTION OF EXTERNAL BORROWING WILL BE ACCOMPLISHED THROUGH DIRECT ACTIONS OF FRENCH TREASURY. THIS IS CASE OF 1.5 BILLION EURO- DOLLAR BORROWING THAT HAS ALREADY TAKEN PLACE. TREASURY IS ALSO "COUNSELING" LARGE NATIONALIZED ENTER- PRISES TO BORROW ABROAD. DELOUVIER, HEAD OF ELECTRICITE DE FRANCE, RECENTLY TOLD US THAT TREASURY WAS SO PRESS- ING EDF, AND YESTERDAY IT WAS ANNOUNCED THAT EDF IS CONTRACTING 500 MILLION EURO-DOLLAR BANK LOAN WITH CONDITIONS VERY SIMILAR TO RECENT TREASURY OPERATION. NATIONAL TELECOMMUNICATIONS FUND, WHICH FINANCES EXPAN- SION OF FRENCH TELEPHONE NETWORK, AND SNCF (RAILROADS) ARE BOTH SEEKING TO FLOAT IN U.S. MARKET BOND ISSUES CARRYING FRENCH GOVT GUARANTEE. APPARENTLY, ONE QUES- TION WHICH THESE PROSPECTIVE BORROWERS HAVE RAISED WITH FRENCH AUTHORITIES IS PROTECTION AGAINST EXCHANGE RISKS ON THESE DOLLAR-DENOMINATED LIABILITIES.
5. REFERENCES CITED IN PARAGRAPH 1 ABOVE CONTAIN CONSIDERABLE MATERIAL RE FRENCH POSITION ON GOLD. IN ADDITION, SEE PARIS 29343, PARIS 29366 AND PARIS 30004 FOR VIEWS EXPRESSED BY FRENCH OFFICIALS FOLLOW- ING LAST NOVEMBER'S DECISION TO TERMINATE 1968 WASH- INGTON GOLD AGREEMENT.
6. ON CONCRETE STEPS TAKEN OR CONTEMPLATED TO REDUCE IMPACT OF OIL PRICE RISE ON CURRENCY AND TRADE RELATIONSHIPS, FLOAT AND EXTERNAL BORROWING ARE DIS- CUSSED ABOVE. IN ADDITION, FRENCH HAVE MADE OVERTURES TO A NUMBER OF OIL -EXPORTING COUNTRIES WITH A VIEW TO WORKING OUT BILATERAL DEALS WITH THEM. AS EXPLAINED TO US BY DIRECTOR OF ECONOMIC AFFAIRS, MFA, PURPOSE OF THESE EFFORTS IS NOT TO NAIL DOWN OIL SUPPLIES, BUT RATHER TO SELL GOODS IN ORDER TO HELP PAY FOR OIL (PARA 7, PARIS 4181). WITH EXCEPTION OF NEAR-TERM CONTRACT WITH SAUDI ARABIA (30 MILLION TONS OVER THREE YEARS), THESE ARRANGEMENTS ARE ALL STILL IN THE "IN PRINCIPLE" STAGE. MOREOVER, THERE ARE REPORTS THAT FINANCE MINISTER DISCARD D'ESTAING IS UNHAPPY ABOUT BILATERAL APPROACH PUSHED BY FOREIGN MINISTER JOBERT. GISCARD SUPPOSEDLY FEARS IT COULD COMMIT TO BUYING OIL OVER CONSIDERABLE PERIOD AT UNREASONABLE PRICES. SECOND, PRIME MINISTER HAS AN- NOUNCED NEW STEPS WILL BE TAKEN IN MARCH TO ECONOMIZE FRENCH CONSUMPTION OF ENERGY. FINALLY, FINANCE MINISTER HAS SEVERAL TIMES SAID HE WOULD ANNOUNCE IN LATE WINTER OR EARLY SPRING SERIES OF MEASURES TO STIMULATE EXPORTS. SO FAR, ONLY STEP MENTIONED OFFI- CIALLY IS SOME IMPROVEMENT IN EXPORT CREDIT INSURANCE MECHANISM. PRESS REPORTS SAY THAT FINANCE MINISTRY IS ALSO STUDYING POSSIBILITY OF ACCELERATED DEPRECI- TION ALLOWANCE FOR FIRMS THAT ACHIEVE SPECIFIED EXPORT TARGETS. ON TRADE PROMOTION FRONT, MINISTER HAS SAID IN SEVERAL RECENT PUBLIC STATEMENTS THAT IN ADDITION TO MARKET OF OIL PRODUCERS, FRANCE SHOULD MAKE SPECIAL EFFORT TO IMPROVE ITS POSITION IN U.S. AND OTHER NORTH AMERICAN MARKETS AND IN MARKETS OF OTHER COUNTRIES THAT ARE LARGE-SCALE EXPORTERS OF PRIMARY PRODUCTS.
7. IN THEIR NUMEROUS PUBLIC PRONOUNCEMENTS RE INCIDENCE OF OIL PRICES ON WORLD PAYMENTS SITUATION, FRENCH OFFICIAL SPOKESMEN HAVE CURIOUSLY NOT ADDRESSED QUESTION OF RECYCLING OIL REVENUES AND SPECIAL FINAN- CIAL ARRANGEMENTS TO MITIGATE IMPACT OF INCREASED OIL PRICES ON LDCS. REPORT CIRCULATING IN PARIS AT TIME OF C-20 MINISTERIAL MEETING IN ROME WERE TO EFFECT THAT FINANCE MINISTER GISCARD D'ESTAING KEPT QUIET DURING C-20 DISCUSSION OF THESE TOPICS. IRWIN
Source: https://www.wikileaks.org/plusd/cables/1974PARIS04616_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974ROME12065_b
1. FOLLWING IS TRANSLATION OF ITALIAN TEXT OF OFFICIAL
COMMUNIQUE RELEASED AUGUST 31 BY CHANCELLOR SCHMIDT AND
PRIME MINISTER RUMOR FOLLOWING TALKS AT BELLAGIO AUGUST 30-31.
UNCLASSIFIED
UNCLASSIFIED
PAGE 02 ROME 12065 031808Z
2. /QUOTE/. THE TWO CHEFS OF GOVERNMENT, WITH THE PRIOR AGREEMENT OF THEIR MINISTERS OF TREASURY AND FINANCE RESPECTIVELY, AGREED ON A DEPOSIT OF $2 BILLION AT THE BANK OF ITALY DRAWN FROM THE EXCHANGE RESERVES OF THE GERMAN BUDESBANK AND ON A GOLD DEPOSIT AT THE GERMAN BUNDESBANK BY THE BANK OF ITALY. THE CONDITIONS FOR THIS AGREEMENT HAVE BEEN AGREED UPON BETWEEN THE CENTRAL BANKS OF THE TWO COUNTRIES AND ARE NOW UNDERGOING APPROVAL BY THE COMPETENT ORGANS OF THE BANKS.
3. THE PRESENT AGREEMENT FALLS WITHIN THE FRAMEWORK OF THE INITIATIVE TAKEN AT ZEIST BY THE MINISTERS OF FINANCE OF MEMBER COUNTRIES OF THE EC AND CONFIRMED AT WASHINGTON BY THE GROUP OF 10.
4. THE TWO CHIEFS OF GOVERNMENT EXPRESSED THEIR SATIS- FACTION IN THE FACT THAT, WITH THE PRESENT AGREEMENT, A MO- BILIZATION OF THE GOLD COMPONENT OF FOREIGN RESERVES HAS BEEN CARRIED OUT AT A PRICE RELATED TO THE MARKET PRICE. /END QUOTE/. VOLPE
Source: https://www.wikileaks.org/plusd/cables/1974ROME12065_b.html
Summary: Timeline overview
2. /QUOTE/. THE TWO CHEFS OF GOVERNMENT, WITH THE PRIOR AGREEMENT OF THEIR MINISTERS OF TREASURY AND FINANCE RESPECTIVELY, AGREED ON A DEPOSIT OF $2 BILLION AT THE BANK OF ITALY DRAWN FROM THE EXCHANGE RESERVES OF THE GERMAN BUDESBANK AND ON A GOLD DEPOSIT AT THE GERMAN BUNDESBANK BY THE BANK OF ITALY. THE CONDITIONS FOR THIS AGREEMENT HAVE BEEN AGREED UPON BETWEEN THE CENTRAL BANKS OF THE TWO COUNTRIES AND ARE NOW UNDERGOING APPROVAL BY THE COMPETENT ORGANS OF THE BANKS.
3. THE PRESENT AGREEMENT FALLS WITHIN THE FRAMEWORK OF THE INITIATIVE TAKEN AT ZEIST BY THE MINISTERS OF FINANCE OF MEMBER COUNTRIES OF THE EC AND CONFIRMED AT WASHINGTON BY THE GROUP OF 10.
4. THE TWO CHIEFS OF GOVERNMENT EXPRESSED THEIR SATIS- FACTION IN THE FACT THAT, WITH THE PRESENT AGREEMENT, A MO- BILIZATION OF THE GOLD COMPONENT OF FOREIGN RESERVES HAS BEEN CARRIED OUT AT A PRICE RELATED TO THE MARKET PRICE. /END QUOTE/. VOLPE
Source: https://www.wikileaks.org/plusd/cables/1974ROME12065_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974LUXEMB00817_b
1. ALBERT DONDELINGER, GOL BANKING COMMISSIONER, TOLD
ME DECEMBER 4 HE WAS CONCERNED THAT US TREASURY DECISION
TO AUCTION OFF A PORTION OF US GOLD RESERVES COULD DRIVE
THE PRICE OF GOLD DOWN AT A TIME WHEN IT IS IN THE
INTEREST OF THE INDUSTRIALIZED NATIONS TO MAINTAIN THE
PRICE AT A HIGH LEVEL. DONDELINGER PROPOSED THAT THE
CENTRAL BANKERS MEET SECRETLY IN BASEL IN ORDER TO
ESTABLISH GROUND RULES FOR GOLD SALES AND TO AGREE UPON A
SECRET MINIMUM PRICE, OR MINIMUM PRICE BAND, FOR GOLD. WHEN THE PRICE OF GOLD THREATENED TO SINK TO THIS AGREED
MINIMUM, COMPETENT GOVERNMENT AUTHORITIES (I.E., CENTRAL
BANKS OR THE TREASURY) WOULD INTERVENE IN THE GOLD MARKET
IN ORDER TO STABILIZE THE GOLD PRICE. DONDELINGER STATED
HE IS AWARE OF US DESIRES TO DECREASE THE ROLE OF GOLD IN
THE MONETARY SYSTEM AND ACCEPTS THE INEVITABILITY OF A
DIMINISHED ROLE FOR GOLD. HE BELIEVES IT WOULD BE FOOLISH,
HOWEVER, FOR THE INDUSTRIALIZED NATIONS TO CURTAIL THE VALUE
OF AN IMPORTANT FINANCIAL ASSET BY PRECIPITOUS OR
SUBSTANTIAL GOLD SALES AT A TIME WHEN THESE SAME NATIONS ARE
EXPLORING VARIOUS GOLD-LINKED FINANCIAL GUARANTEES FOR
LOANS NEEDED TO FINANCE GROWING DEFICITS. MORE
IMPORTANTLY, HE FELT THAT SEVERAL EUROPEAN NATIONS, BECAUSE
OF THEIR GREATER NEED (AND PERHAPS DESIRE) TO USE GOLD
RESERVES AS FINANCIAL GUARANTEES, MIGHT VIEW THE US
ACTION AS ANOTHER INDICATION OF US PROCLIVITY TO GO IT
ALONE WITHOUT TAKING INTO ACCOUNT EUROPEAN INTERESTS.
2. I POINTED OUT TO DONDELINGER THAT THE JANUARY 6 SALES OF 2 MILLION GOLD OUNCES WAS ONLY A MINUTE PERCENTAGE OF US GOLD STOCKS AND THAT IT WAS DIRECTED AT SATISFYING INTERNAL US DEMAND ONCE PRIVATE CITIZENS COULD HOLD GOLD. FURTHER, THE US WAS NOT AIMING FOR ANY PARTICULAR GOLD PRICE. DONDELINGER AGREED THAT THIS MAY WELL BE OUR INTENTION BUT THAT THE SITUATION, PARTICULARLY TO THE EXTENT THAT IT IS A PRELUDE TO FURTHER GOLD SALES, CALLS FOR A COORDINATED APPROACH AMONG THE INDUSTRIALIZED NATIONS.FARKAS
Source: https://www.wikileaks.org/plusd/cables/1974LUXEMB00817_b.html
Summary: Timeline overview
2. I POINTED OUT TO DONDELINGER THAT THE JANUARY 6 SALES OF 2 MILLION GOLD OUNCES WAS ONLY A MINUTE PERCENTAGE OF US GOLD STOCKS AND THAT IT WAS DIRECTED AT SATISFYING INTERNAL US DEMAND ONCE PRIVATE CITIZENS COULD HOLD GOLD. FURTHER, THE US WAS NOT AIMING FOR ANY PARTICULAR GOLD PRICE. DONDELINGER AGREED THAT THIS MAY WELL BE OUR INTENTION BUT THAT THE SITUATION, PARTICULARLY TO THE EXTENT THAT IT IS A PRELUDE TO FURTHER GOLD SALES, CALLS FOR A COORDINATED APPROACH AMONG THE INDUSTRIALIZED NATIONS.FARKAS
Source: https://www.wikileaks.org/plusd/cables/1974LUXEMB00817_b.html
Summary: Timeline overview
ECB - Relations with international institutions
Institutional context
The ECB is involved in international economic cooperation in respect of tasks entrusted to the Eurosystem. Its involvement depends on the tasks concerned and ranges from the representation of policy positions (single monetary policy) to the formulation of the ECB’s own positions alongside those of other policy-makers in the European Union.The ECB's involvement in international cooperation is based on rules laid down in Article 138 of the Treaty on the Functioning of the European Union and Articles 6(1) and 12 (5) of the Statute of the ESCB.
The international relations of the ECB
One important element of the ECB’s international cooperation consists of the mutual exchange of information and views with other policy-makers in multilateral organisations and fora. In particular, the mutual assessment of economic developments and policies in major countries and economic areas, especially in the G20 context, enhances the ECB’s ability to analyse the impact of external developments on the euro area economy. Given its voluntary and non-binding nature, this form of cooperation does not impinge on the ECB’s independence.Exchanges of information and views and the mutual assessment of policies are complemented by surveillance, including of the euro area, carried out by independent organisations such as the International Monetary Fund (IMF). These organisations regularly monitor and assess the economic developments and policies of their member countries. Whenever euro area monetary policy is under review, the ECB is the sole counterpart in discussions with these organisations. International surveillance adds to the transparency of the ECB as the assessments of euro area economic policies are published.
The ECB also participates, within its areas of competence, in the efforts of the international community to develop rules and best practices to improve financial stability and the efficiency and transparency of policy-making. The notion of good public governance is indeed a central component of international cooperation.
Finally, the ECB may coordinate its actions with those of central banks outside the euro area countries under exceptional circumstances.
The ECB:
- has permanent observer status at the IMF;
- participates in these fora: G20 Finance Ministers and Central Bank Governors and G7 Finance Ministers and Central Bank Governors (G8 Information Centre), and others;
- is a member and shareholder of the Bank for International Settlements (BIS). The ECB participates in the BIS governing and oversight bodies and in all committees and working groups based on this institution, including the Basel Committee on Banking Supervision, the Committee on Payment and Settlement Systems, the Committee on the Global Financial System, and the Markets Committee;
- participates in a number of committees and working groups of the Organisation for Economic Co-operation and Development (OECD), where it acts as a separate member of the European Union delegation alongside the European Commission;
- participates in the new Financial Stability Board set up in April 2009 by G20 leaders as a successor to the Financial Stability Forum (FSF).
Source: http://www.ecb.int/ecb/tasks/international/institutions/html/index.en.html
IMF observer status
IMF source: http://www.imf.org/external/np/sec/pr/1998/pr9864.htm
Monetary gold wikileaks - 1974TEHRAN10780_b
1. SUMMARY: PROMPT GOI CLARIFICATION OF SHAH'S STATEMENTS TO
AP REPORTER ON "PRICE OF GOLD" AFFIRMS IRAN IS MORE CONCERNED OVER
ANY INFLATIONARY IMPACT OF A CHANGE RATHER THAN IN PRICE OF
GOLD PER SE. END SUMMARY.
2. GOI PROMPTLY ISSUED CLARIFYING STATEMENT APPEARING IN PRESS DECEMBER 21, CONCERNING SHAH'S STATEMENTS ON PRICE OF GOLD TO AP REPORTER HUGH MULLIGAN. AS REPORTED IN INTERNATIONAL HERALD TRIBUNE (PARIS) ON DECEMBER 20, SHAH REFERRED TO TALKS BETWEEN PRESIDENTS FORD AND GISCARD D'ESTAING AND INDICATED INCREASE IN GOLD PRICE WOULD BE A VERY, VERY GRAVE PROBLEM" AND THAT INCREASE IN OIL PRICES WOULD "SURELY FOLLOW." "HE FURTHER INDICATED INCREASE IN GOLD PRICE COULD END RECENTLY DECIDED NINE-MONTH FREEZE IN PRICE OF OIL BY OPEC COUNTRIES. MULLIGAN QUOTED SHAH AS SAYING THAT INFLATIONARY SPIRAL AND LOSS OF IRANIAN PURCHASING POWER COULD EVENTUALLY LEAD TO COLLAPSE OF THE WORLD MONETARY SYSTEM.
3. CLARIFICATION ISSUED BY IMPERIAL COURT STATED:(BEGIN TEXT) HIM THE SHANANSHAH, IN THE INTERVIEW GRANTED TO A CORRESPONDENT OF THE ASSOCIATED PRESS, REFERRED TO RECENT DECISIONS CONCERNING THE UP-PRICING OF GOLD HELD IN STOCK BY VARIOUS GOVERNMENTS. TO AVOID ANY POSSIBILITY OF HIS IMPERIAL MAJESTY'S REMARKS BEING ERRONEOUSLY INTERPRETED OR OTHERWISE MISCONSTRUED, IT SHOULD BE CLEAR THAT THE SHAHANSHAH SAID: "IF THE UP-PRICING OF GOLD RESERVES PROVES TO LEAD TO AN EROSIION OF THE REAL PURCHASING POWER OF OIL EXPORTING NATIONS FROM EXPORTS OF THEIR OIL, THESE COUNTRIES SHOULD TAKE NECESSZRY STEPS AIMED AT PROTECTING THEIR REAL PURCHASING POWER." (END TEXT).
4. COMMENT EMBASSY BELIEVES AP REPORTER EITHER INACCURATELY REPORTED SHAH'S REMARKS OR QUOTED HIS STATEMENTS OUT OF CONTEXT. IRANIANS DO NOT SEEM TO HAVE STRONG VIEWS ON PRICE OF GOLD PER SE. MINISTRY OF ECONOMICS AND FINANCE UNDER SECRETARY FOR ECONOMIC AFFAIRS AHMAD KOOROS TOLD EMBOFF SHAH'S REMARKS, ALSO QUOTED IN INTERVIEW, ELABORATING ON HIS CALL FOR TALKS WITH OIL IMPROTING NATIONS ON LINKING THE PRICE OF OIL TO MARKET BASKET OR OTHER COMMODITIES WERE MOST IMPORTANT PART OF INTERVIEW AS STATEMENT OF GOI POLICY. CENTRAL BANK OR IRAN DIRECTOR- GENERAL FOR INTERNATIONAL AFFAIRS SHAHPUR SHIRAZI SAID LIQUIDITY AND MANAGEMENT OF DOMESTIC POLICIES IN MAJOR WORLD TRADING COUN- TRIES REMAIN IRAN'S CHIEF CONCERN.
5. IRANIANS CLEARLY ARE APPREHENSIVE OVER CURRENT UNCERTAIN INTERNATIONAL FINANCIAL SITUATION, AND CHANGES IN STATUS OF GOLD IS ONLY ONE ASPECT OF THEIR CONCERN. THEIR MAIN GOAL REMAINS TO DEFEND AS ENERGETICALLY AS POSSIBLE THE PURCHASING POWER OF THEIR PETRODOLLARS. IF A COUNTRY'S VALUATION OF ITS GOLD RESERVES AT CURRENT MARKET PRICES DOES NOT HAVE AN INFLATIONARY IMPACT IN TERMS OF PRICES IRAN MUST PAY FOR ITS IMPORTS, THE GOI WILL NOT OBJECT. QUICK "CLARIFICATION" OF SHAH'S STATEMENTS INDICATES GOI'S CONCERN THAT THEY NOT ADD ADDITIONAL CONFUSION TO SITUATION. HELMS
Source: https://www.wikileaks.org/plusd/cables/1974TEHRAN10780_b.html
Summary: Timeline overview
2. GOI PROMPTLY ISSUED CLARIFYING STATEMENT APPEARING IN PRESS DECEMBER 21, CONCERNING SHAH'S STATEMENTS ON PRICE OF GOLD TO AP REPORTER HUGH MULLIGAN. AS REPORTED IN INTERNATIONAL HERALD TRIBUNE (PARIS) ON DECEMBER 20, SHAH REFERRED TO TALKS BETWEEN PRESIDENTS FORD AND GISCARD D'ESTAING AND INDICATED INCREASE IN GOLD PRICE WOULD BE A VERY, VERY GRAVE PROBLEM" AND THAT INCREASE IN OIL PRICES WOULD "SURELY FOLLOW." "HE FURTHER INDICATED INCREASE IN GOLD PRICE COULD END RECENTLY DECIDED NINE-MONTH FREEZE IN PRICE OF OIL BY OPEC COUNTRIES. MULLIGAN QUOTED SHAH AS SAYING THAT INFLATIONARY SPIRAL AND LOSS OF IRANIAN PURCHASING POWER COULD EVENTUALLY LEAD TO COLLAPSE OF THE WORLD MONETARY SYSTEM.
3. CLARIFICATION ISSUED BY IMPERIAL COURT STATED:(BEGIN TEXT) HIM THE SHANANSHAH, IN THE INTERVIEW GRANTED TO A CORRESPONDENT OF THE ASSOCIATED PRESS, REFERRED TO RECENT DECISIONS CONCERNING THE UP-PRICING OF GOLD HELD IN STOCK BY VARIOUS GOVERNMENTS. TO AVOID ANY POSSIBILITY OF HIS IMPERIAL MAJESTY'S REMARKS BEING ERRONEOUSLY INTERPRETED OR OTHERWISE MISCONSTRUED, IT SHOULD BE CLEAR THAT THE SHAHANSHAH SAID: "IF THE UP-PRICING OF GOLD RESERVES PROVES TO LEAD TO AN EROSIION OF THE REAL PURCHASING POWER OF OIL EXPORTING NATIONS FROM EXPORTS OF THEIR OIL, THESE COUNTRIES SHOULD TAKE NECESSZRY STEPS AIMED AT PROTECTING THEIR REAL PURCHASING POWER." (END TEXT).
4. COMMENT EMBASSY BELIEVES AP REPORTER EITHER INACCURATELY REPORTED SHAH'S REMARKS OR QUOTED HIS STATEMENTS OUT OF CONTEXT. IRANIANS DO NOT SEEM TO HAVE STRONG VIEWS ON PRICE OF GOLD PER SE. MINISTRY OF ECONOMICS AND FINANCE UNDER SECRETARY FOR ECONOMIC AFFAIRS AHMAD KOOROS TOLD EMBOFF SHAH'S REMARKS, ALSO QUOTED IN INTERVIEW, ELABORATING ON HIS CALL FOR TALKS WITH OIL IMPROTING NATIONS ON LINKING THE PRICE OF OIL TO MARKET BASKET OR OTHER COMMODITIES WERE MOST IMPORTANT PART OF INTERVIEW AS STATEMENT OF GOI POLICY. CENTRAL BANK OR IRAN DIRECTOR- GENERAL FOR INTERNATIONAL AFFAIRS SHAHPUR SHIRAZI SAID LIQUIDITY AND MANAGEMENT OF DOMESTIC POLICIES IN MAJOR WORLD TRADING COUN- TRIES REMAIN IRAN'S CHIEF CONCERN.
5. IRANIANS CLEARLY ARE APPREHENSIVE OVER CURRENT UNCERTAIN INTERNATIONAL FINANCIAL SITUATION, AND CHANGES IN STATUS OF GOLD IS ONLY ONE ASPECT OF THEIR CONCERN. THEIR MAIN GOAL REMAINS TO DEFEND AS ENERGETICALLY AS POSSIBLE THE PURCHASING POWER OF THEIR PETRODOLLARS. IF A COUNTRY'S VALUATION OF ITS GOLD RESERVES AT CURRENT MARKET PRICES DOES NOT HAVE AN INFLATIONARY IMPACT IN TERMS OF PRICES IRAN MUST PAY FOR ITS IMPORTS, THE GOI WILL NOT OBJECT. QUICK "CLARIFICATION" OF SHAH'S STATEMENTS INDICATES GOI'S CONCERN THAT THEY NOT ADD ADDITIONAL CONFUSION TO SITUATION. HELMS
Source: https://www.wikileaks.org/plusd/cables/1974TEHRAN10780_b.html
Summary: Timeline overview
Saturday, April 13, 2013
Monetary gold wikileaks - 1973ECBRU04614_b
1. SUMMARY. THE EC COMMISSIN'S REPORT TO THE COUNCIL
(POUCHED TO EUR/RPE ON JULY 2, 1973) HAS NOT YET BEEN
SERIOUSLY STUDIED IN THE COMMUNITY. THE FIRST RE-
ACTION OF MANY OF OUR CONTACTS, HOWEVER, IS THAT
THE PROPOSAL IS A BOLD ONE CONTAINING A NOVEL EMPHASIS ON
PROGRESSIVE POOLING OF RESERVES DENOMINATED IN A UNIT OF ACCOUNT
THAT WOULD BECOME A SETTLEMENT AND RESERVE INSTRUMENT. PRELIM-
INARY INDICATIONS HERE ARE THAT THE UK, ITALY AND THE SMALLER
MEMBER STATES -- WHILE NOT NECESSARILY ADVOCATING EARLY
ACTION -- GENERALLY FAVOR THE PROPOSAL WHILE THE
GERMANS AND FRENCH ARE FAR MORE RETICENT. THE MONETARY
AND CENTRAL BANK GOVERNORS' COMMITTEES AND THE SO-
CALLED THERON GROUP WILL SUBMIT REPORTS ON THE PROPOSAL,
AND THE EC FINANCE MINISTERS MAY HAVE AN INITIAL
DISCUSSION OF IT BY LATE OCTOBER. OUR SOURCES TELL US
THERE MAY BE POLITICAL PRESSURE TO TAKE SOME CONCRETE ACTION,
EVEN IF LARGELY SYMBOLIC, BY THE BEGINNING OF 1974. END
SUMMARY.
2. THE COMMISSION'S PAPER ON PROGRESSIVE POOLING OF RESERVES AND ADJUSTMENT OF SHORT-TERM MONETARY SUPPORT ARRANGEMENTS GREW OUT OF THE COMMUNITY'S COMMITMENT TO ESTABLISH ECONOMIC AND MONETARY UNION BY DECEMBER 31, 1980, A COMMITMENT WHICH, AS THE COMMISSION'S PAPER NOTES, WAS REAFFIRMED BY THE EC SUMMIT IN OCTOBER 1972. THE PAPER DEALS PRINCIPALLY WITH THE CONDITIONS FOR PROGRESSIVE POOLING OF RESERVES AND IMPROVEMENT OF COMMUNITY CREDIT MACHINERY. IT ALSO STRESSES THE IMPORTANCE OF A) STRENGTHENING COORDINATION OF MEMBER STATE MONETARY POLICIES; B) JOINT ACTION ON INTER- NATIONAL MONETARY PROBLEMS, AND C) GIVING THE COMMUNITY "A WATCHING BRIEF" ON CHANGES IN COMMUNITY EXCHANGE RATE RELATIONS. WITH REGARD TO THE LATTER POINT, THE PAPER SAYS THAT AS A RESULT OF GROWING ECONOMIC INTER- DEPENDENCE WITHIN THE COMMUNITY, AN EXCHANGE RATE POLICY MUST ALLOW FOR "COMMUNITY DIMENSIONS AND NOT BE THE SOLE RESPONSIBILITY OF THE MEMBER STATES". WE BELIEVE THE COMMISSION'S VIEW ON EXCHANGE RATES IS NOTEWORTHY IF ONLY BECAUSE IT WAS SURROUNDED WITH CONTROVERSY WHEN IT APPEARED IN THE ORIGINAL DRAFT AND FACED POSSIBLE ELIMINATION IN THE FINAL VERSION...
Source: https://www.wikileaks.org/plusd/cables/1973ECBRU04614_b.html
Summary: Timeline overview
2. THE COMMISSION'S PAPER ON PROGRESSIVE POOLING OF RESERVES AND ADJUSTMENT OF SHORT-TERM MONETARY SUPPORT ARRANGEMENTS GREW OUT OF THE COMMUNITY'S COMMITMENT TO ESTABLISH ECONOMIC AND MONETARY UNION BY DECEMBER 31, 1980, A COMMITMENT WHICH, AS THE COMMISSION'S PAPER NOTES, WAS REAFFIRMED BY THE EC SUMMIT IN OCTOBER 1972. THE PAPER DEALS PRINCIPALLY WITH THE CONDITIONS FOR PROGRESSIVE POOLING OF RESERVES AND IMPROVEMENT OF COMMUNITY CREDIT MACHINERY. IT ALSO STRESSES THE IMPORTANCE OF A) STRENGTHENING COORDINATION OF MEMBER STATE MONETARY POLICIES; B) JOINT ACTION ON INTER- NATIONAL MONETARY PROBLEMS, AND C) GIVING THE COMMUNITY "A WATCHING BRIEF" ON CHANGES IN COMMUNITY EXCHANGE RATE RELATIONS. WITH REGARD TO THE LATTER POINT, THE PAPER SAYS THAT AS A RESULT OF GROWING ECONOMIC INTER- DEPENDENCE WITHIN THE COMMUNITY, AN EXCHANGE RATE POLICY MUST ALLOW FOR "COMMUNITY DIMENSIONS AND NOT BE THE SOLE RESPONSIBILITY OF THE MEMBER STATES". WE BELIEVE THE COMMISSION'S VIEW ON EXCHANGE RATES IS NOTEWORTHY IF ONLY BECAUSE IT WAS SURROUNDED WITH CONTROVERSY WHEN IT APPEARED IN THE ORIGINAL DRAFT AND FACED POSSIBLE ELIMINATION IN THE FINAL VERSION...
Source: https://www.wikileaks.org/plusd/cables/1973ECBRU04614_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974BONN07155_b
1. THE MAY 3 ISSUE OF THE WEEKLY DIE ZEIT CARRIED AN INTERVIEW WITH BUNDESBANK VICE PRESIDENT EMMINGER UNDER THE HEADLINE: "SNUBBING THE US?" (SUBTITLE: THE EUROPEAN CENTRAL BANKS WANT A FREE HAND IN GOLD TRADING). EMMINGER STATED THAT TRADING OF GOLD BETWEEN CENTRAL BANKS AT FREELY ARRANGED PRICES, OR SALES AND PURCHASES OF GOLD BY CENTRAL BANKS IN FREE MARKETS, WOULD DEPRIVE RPT DEPRIVE GOLD OF ITS ROLE AS THE STANDARD OF VALUE OF CURRENCIES. THIS FUNCTION SHOULD BE TAKEN OVER BY SDR'S. A REALIZATION OF THE PROPOSALS OF THE EC FINANCE MINISTERS WOULD, TO THIS EXTENT, CONFIRM THE TREND TOWARD A REDUCED MONETARY ROLE FOR GOLD. AT THE SAME TIME, THE EC PROPOSALS WOULD MAKE GOLD AVAILABLE FOR PAYMENTS PUR- POSES, BUT WOULD NOT RPT NOT MEAN A STRENGTHENING OF THE ROLE OF GOLD.
2. EMMINGER ALSO STATED THAT THE DESIRE TO MAKE GOLD FULLY AVAIL- ABLE FOR PAYMENTS PURPOSES COULD NOT BE ACHIEVED SIMPLY BY ALLOWING CENTRAL BANKS TO SELL GOLD ON THE FREE MARKET. IT SHOULD ALSO BE POSSIBLE TO SELL GOLD AT REALISTIC PRICES TO OTHER CENTRAL BANKS. MOREOVER, IT MIGHT BECOME NECESSARY FOR SOME GROUP OF CENTRAL BANKS TO MAKE SPECIAL ARRANGEMENTS FOR REGULATED GOLD SALES. IN THIS RE- GARD, EMMINGER SAID A PROPOSAL IS UNDER DISCUSSION TO INTRODUCE A "BUFFER STOCK" FOR THE SALE OF CENTRAL BANK GOLD ON FREE MARKETS. THE EUROPEAN FUND FOR MONETARY COOPERATION COULD ACT AS SALES AGENT UNDER THE PROPOSAL.
3. EMMINGER ALSO STATED THAT THE US REACTION TO THE EC PROPOSALS IS NOT YET KNOWN. FURTHER: "ONE CAN ONLY HOPE THAT THE RESULT WILL NOT BE A COMPLETELY UNNECESSARY CONFRONTATION. IN ORDER TO PREVENT THIS, THE PROPOSALS OF THE EC FINANCE MINISTERS HAVE BEEN MADE AS PRAGMATIC AS POSSIBLE." HILLENBRAND
Source: https://www.wikileaks.org/plusd/cables/1974BONN07155_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1976BERN03745_b
1. SUMMARY: SWISS PRESS REACTION TO SECOND SHARP DROP
IN GOLD PRICE SINCE JULY IMF AUCTION REFLECTS VIEW THAT
GOLD PRICE FALL IS DIRECT RESULT US POLICIES. FORMER
PRESS OPTIMIMISM ABOUT RELATIVE GOLD PRICE STABILITY OF PAST
FEW WEEKS HAS GIVEN WAY TO APPREHENSION THAT CONTINUED
FALL IN PRICE COULD UNDERMINE STRENGTH AND STABILITY WESTERN INDUSTRALIZED COUNTRIES. PRESS ARTICLES CONTEND THAT
US WOULD THEN FACE AN URGENT FOREIGN POLICY ISSUE RATHER
THAN ONE RELATED ONLY TO MONETARY POLICY. END SUMARY.
2. AGENCE ECONOMIQUE ET FINANCIARE (AGEFI) FRONT PAGE EDITORIAL STATED THAT GOLD PRICE UNDER ATTACK BY US AND FREG, TWO ECONOMIC GIANTS WHICH DESPITE THEIR OPEN HOSTILITY TO GOLD HAVE STRONGEST CURRENCIES. EDITORIAL GOES ON TO SAY THAT US POLICY AIMS AT MORE THAN PREVENTING SOVIETS FROM BUILDING UP LARGE FOREIGN EXCHANGE RESERVES THROUGH GOLD SALES AT APPRECIATED PRICES. AGEFI NOTED WORLD GOLD PRODUCTION DIMINISHED (FROM 1,267.5 TONS PRODUCED 1970 TO 927.8 TONS PRODUCED 1975). WHILE WORLD ECONOMY REQUIRES LARGER SUPPLY HARD CURRENCIES TO FINANCE ECONOMIC EXPANSION AND DEVELOPMENT. THEREFORE, GOLD SUPPLY NO LONGER ABLE PLAY CENTRAL MONETARY ROLE; INTERNATIONAL MONETARY SYSTEM MUST BE BASED ON CONFIDENCE DETERMINED BY ECONOMIC OUTPUT AND TRADE PERFORMANCE.
3. JOURNAL DE GENEVE AND AGEFI OPINED IMF ACTING AT US INSTIGATION TO SELL ITS GOLD, THEREBY DRIVING PRICE DOWN, ON PRETEXT USING GAINS TO PRIVIDE ASSISTANCE TO LDC'S. BOTH PAPERS POINTED TO RELATIVELY MODEST ASSISTANCE LDC'S COULD HOPE OBTAIN FROM IMF SALES AND CONCLUDED THIS ASPECT SALE UNIMPORTANT. JOURNAL NOTED THAT VALUE OF SOFT LOANS LDC'S COULD EXPECT RECEIVE FROM DC'S FAR EXCEEDED IMPORTANCE TO THEM OF IMF GOLD SALES.
4. RE IMF SEPTEMBER 15 GOLD SALE, JOURNAL SAID THAT IMF WOULD WITHHOLD SOME OF TOTAL 780,000 OUNCES OFFERED IF PRICES BID WERE RIDICULOUSLY LOW. NEUE ZURCHER ZEITUNG QUOTED FRANKFURTER ALLGEMEINE ZEITUNG REPORT THAT ZURICH GOLDPOOL BANKS EXPECT GENERAL ABSENTION FROM BUYING AT NEXT IMF SALE. NZZ ALSO REPORTED CITICORP ANALYSIS FORECASTING POSSIBLE DROP IN GOLD TO DOLLARS 60 PER OUNCE OVER NEXT 12 MONTHS.
5. PAPERS AGREED THAT OUTLOOK BLURRED AND UNCERTAIN BECAUSE SALES PRIMARILY FROM PRIVATE HOLDERS AND TURNOVER NORMAL ON ZURICH MARKET. AGEFI NOTED THAT THERE ARE THOSE WHO WILL CONTINUE TO HOLD GOLD AS GUARD AGAINST FUTURE CATASTROPHIES, WHICH ONLY DETRACTS FROM GOLD'S VALUE AS NUMERAIRE. JOURNAL ASKED WHAT WOULD HAPPEN IF PRONOUNCED GOLD PRICE FALL TRIGGERED ECONOMIC CRISES, E.G., IN SOUTH AFRICA, FRANCE AND ITALY, AND QUESTIONED WHETHER US CONCERNED ABOUT SUCH CONTINGENCY. JOURNAL ANSWERED ITS OWN QUESTIONS BY NOTING HOPEFULLY THAT SOONER OR LATER US WILL REALIZE WHOSE OX IS BEING GORED, AT WHICH TIME DIMINISHED POWER OF WESTERN COUNTRIES WILL CEASE CONSTITUTE PURELY MONETARY ISSUE AND BECOME URGENT MATTER OF FOREIGN POLICY. JOURNAL CONTINUED THAT US IS BASICALLY PRAGMATIC AND WOULD NOT HESITATE CHANGE ITS POLICY WHEN ITS INTERESTS SO DICTATED, ADDING THAT CHANGE OF ADMINISTRATION COULD FACILITATE THIS CHANGE. DAVIS
Source: https://www.wikileaks.org/plusd/cables/1976BERN03745_b.html
Summary: Timeline overview
2. AGENCE ECONOMIQUE ET FINANCIARE (AGEFI) FRONT PAGE EDITORIAL STATED THAT GOLD PRICE UNDER ATTACK BY US AND FREG, TWO ECONOMIC GIANTS WHICH DESPITE THEIR OPEN HOSTILITY TO GOLD HAVE STRONGEST CURRENCIES. EDITORIAL GOES ON TO SAY THAT US POLICY AIMS AT MORE THAN PREVENTING SOVIETS FROM BUILDING UP LARGE FOREIGN EXCHANGE RESERVES THROUGH GOLD SALES AT APPRECIATED PRICES. AGEFI NOTED WORLD GOLD PRODUCTION DIMINISHED (FROM 1,267.5 TONS PRODUCED 1970 TO 927.8 TONS PRODUCED 1975). WHILE WORLD ECONOMY REQUIRES LARGER SUPPLY HARD CURRENCIES TO FINANCE ECONOMIC EXPANSION AND DEVELOPMENT. THEREFORE, GOLD SUPPLY NO LONGER ABLE PLAY CENTRAL MONETARY ROLE; INTERNATIONAL MONETARY SYSTEM MUST BE BASED ON CONFIDENCE DETERMINED BY ECONOMIC OUTPUT AND TRADE PERFORMANCE.
3. JOURNAL DE GENEVE AND AGEFI OPINED IMF ACTING AT US INSTIGATION TO SELL ITS GOLD, THEREBY DRIVING PRICE DOWN, ON PRETEXT USING GAINS TO PRIVIDE ASSISTANCE TO LDC'S. BOTH PAPERS POINTED TO RELATIVELY MODEST ASSISTANCE LDC'S COULD HOPE OBTAIN FROM IMF SALES AND CONCLUDED THIS ASPECT SALE UNIMPORTANT. JOURNAL NOTED THAT VALUE OF SOFT LOANS LDC'S COULD EXPECT RECEIVE FROM DC'S FAR EXCEEDED IMPORTANCE TO THEM OF IMF GOLD SALES.
4. RE IMF SEPTEMBER 15 GOLD SALE, JOURNAL SAID THAT IMF WOULD WITHHOLD SOME OF TOTAL 780,000 OUNCES OFFERED IF PRICES BID WERE RIDICULOUSLY LOW. NEUE ZURCHER ZEITUNG QUOTED FRANKFURTER ALLGEMEINE ZEITUNG REPORT THAT ZURICH GOLDPOOL BANKS EXPECT GENERAL ABSENTION FROM BUYING AT NEXT IMF SALE. NZZ ALSO REPORTED CITICORP ANALYSIS FORECASTING POSSIBLE DROP IN GOLD TO DOLLARS 60 PER OUNCE OVER NEXT 12 MONTHS.
5. PAPERS AGREED THAT OUTLOOK BLURRED AND UNCERTAIN BECAUSE SALES PRIMARILY FROM PRIVATE HOLDERS AND TURNOVER NORMAL ON ZURICH MARKET. AGEFI NOTED THAT THERE ARE THOSE WHO WILL CONTINUE TO HOLD GOLD AS GUARD AGAINST FUTURE CATASTROPHIES, WHICH ONLY DETRACTS FROM GOLD'S VALUE AS NUMERAIRE. JOURNAL ASKED WHAT WOULD HAPPEN IF PRONOUNCED GOLD PRICE FALL TRIGGERED ECONOMIC CRISES, E.G., IN SOUTH AFRICA, FRANCE AND ITALY, AND QUESTIONED WHETHER US CONCERNED ABOUT SUCH CONTINGENCY. JOURNAL ANSWERED ITS OWN QUESTIONS BY NOTING HOPEFULLY THAT SOONER OR LATER US WILL REALIZE WHOSE OX IS BEING GORED, AT WHICH TIME DIMINISHED POWER OF WESTERN COUNTRIES WILL CEASE CONSTITUTE PURELY MONETARY ISSUE AND BECOME URGENT MATTER OF FOREIGN POLICY. JOURNAL CONTINUED THAT US IS BASICALLY PRAGMATIC AND WOULD NOT HESITATE CHANGE ITS POLICY WHEN ITS INTERESTS SO DICTATED, ADDING THAT CHANGE OF ADMINISTRATION COULD FACILITATE THIS CHANGE. DAVIS
Source: https://www.wikileaks.org/plusd/cables/1976BERN03745_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974LONDON07425_b
1. RESPONSIBLE BRITISH PRESS REPORT AT LENGTH THAT FINANCE MINISTERS OF GROUP OF 10 HAVE AGREED TO ALLOW COUNTRIES IN BALANCE OF PAYMENTS DIFFICULTIES TO PLEDGE THEIR
GOLD STOCKS AS BACKING FOR FOREIGN LOANS. TEXT OF U.S.
TREASURY COMMENTS IN REFTEL ALSO REPORTED IN ARTICLES.
THUS FAR, THERE IS LITTLE EDITORIAL COMMENT. LONDON TIMES
EDITORIAL
NOTES THAT THIS POSSIBILITY DOES NOT NECESSARILY
MEAN THERE IS A CNEMEC#ON GOLD'S ROLE IN THE MONETARY
SYSTEM. CENTRAL DECISION BEING WHETHER OR NOT CENTRAL
BANKS WILL BE ALLOWED TO BUY GOLD FROM THE FREE MARKET.
THIS DECISION WILL BE KEY IN REAFIRMING GOLD'S FUTURE
POSITION. FINANCIAL TIMES POINTED OUT IN RE-
LATION TO U.S. TREASURY COMMENTS THAT PRICE AGAINST WHICH
GOLD STOCKS WOULD BE PLEDGED WAS A MATTER OF NEGOTIA-ION BETWEEN BORROWER AND LENDER AND THAT AGREEING ON A
PRICE FOR GOLD IN SUCH AN OPERATION MAY NOT BE EASY.
ANNENBERG
NOTE BY ANALYIS. #AS RECEIVED.
Source: https://www.wikileaks.org/plusd/cables/1974LONDON07425_b.html
Summary: Timeline overview
Source: https://www.wikileaks.org/plusd/cables/1974LONDON07425_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974STATE124905_b
TREASURY SPOKESMAN MADE THE FOLLOWING COMMENTS TO THE
PRESS TODAY (JUNE 12):
"(1) IN THE TREASURY'S VIEW, THE FINANCE MINISTERS
ARE MAKING USEFUL PROGRESS TOWARD THE TWIN OBJECTIVES
OF AGREEING ON PROCEDURAL STEPS TO PHASE GOLD OUT OF A
CENTRAL ROLE IN THE MONETARY SYSTEM AND AT THE SAME TIME
PERMIT IT TO BE MOBILIZED WHEN NEEDED BY COUNTRIES IN
BALANCE OF PAYMENT DIFFICULTIES. DISCUSSIONS ALONG
THESE LINES ARE CONTINUING.
(2) AMONG THE POSSIBILITIES, THE MINISTERS AGREED
IN PRINCIPLE THAT GOLD COULD BE USED AS COLLATERAL FOR
INTERNATIONAL BORROWING. (N.B.: AS IN THE CASE OF ALL
LOANS, THIS PRESUMES THAT THE LENDER WOULD SET THE VALUE ON COLLATERAL PLEDGED, AND THEREFORE SUCH A PLAN WOULD
NOT NECESSARILY ENVISAGE VALUING GOLD AT A MARKET-
RELATED PRICE.)"
TREASURY HAS NO FURTHER COMMENTS REGARDING ANY DISCUSSIONS THAT MAY HAVE TAKEN PLACE AT THE INFORMAL GROUP OF 10 DINNER THAT WAS HELD ON JUNE 11, 1974. SISCO
Source: https://www.wikileaks.org/plusd/cables/1974STATE124905_b.html
Also: https://www.wikileaks.org/plusd/cables/1974STATE124905_b.html
Summary: Timeline overview
TREASURY HAS NO FURTHER COMMENTS REGARDING ANY DISCUSSIONS THAT MAY HAVE TAKEN PLACE AT THE INFORMAL GROUP OF 10 DINNER THAT WAS HELD ON JUNE 11, 1974. SISCO
Source: https://www.wikileaks.org/plusd/cables/1974STATE124905_b.html
Also: https://www.wikileaks.org/plusd/cables/1974STATE124905_b.html
Summary: Timeline overview
Friday, April 12, 2013
Monetary gold wikileaks - 1976BERN03913_b
DURING INFORMAL CONVERSATION AUG 31 WITH EMBOFF ABOUT DAILY FOREIGN EXCHANGE AND GOLD MARKET RATES, SWISS NATIONAL BANK FOREIGN EXCHANGE DEPARTMENT OFFICIAL (POPPOS) SAID THAT ZURICH GOLD MARKET MIGHT CLOSE IF GOLD PRICE STAYED AT 100 OR JUST UNDER 100 FOR SEVERAL MONTHS, BECAUSE GOLD SALES WOULD NO LONGER BE PROFITABLE AT THAT PRICE. POPPS SAID THERE HAD BEEN REPORT THAT AT LEAST ONE LARGE GOLD MINE WILL BE CLOSED IF PRICE DOES NOT RISE SOON. GOLD CLOSED AUG 31 AFTER BUSY DAY AT 103.75, OPENING WAS 102.75. DAVIS
Source: https://www.wikileaks.org/plusd/cables/1976BERN03913_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974JIDDA02264_b
BEGIN SUMMARY: FED RESERVE VICE PRESIDENT DEBS IN DIALOGUE
WITH SAMA GOVERNOR ANWAR ALI HAS PROBED PROBLEM OF MAIN-
TAINING VALUE OF SAUDI INVESTMENTS. THE SAUDI FINANCIAL
TEAM RAISED REAL QUESTIONS OF THE WISDOM OF THEIR PERMITTING THE CONTINUED GROWTH OF PAPER
ASSETS FOR OIL SALES IN THE ABSENCE OF MEANS TO PROTECT
SUCH ASSETS AGAINST INFLATION AND DEPRECIATION. THE U.S.
NEEDS TO TAKE THE LEAD NOW IN CREATING AN INDEXED BOND
SYSTEM TO PROTECT THE PRODUCING COUNTRIES SURPLUSES AGAINST
INFLATION IF NOT DEVALUATION TO FORESTALL FURTHER OPEC PRESSURE
ON PRICES OF OIL. END SUMMARY.
1. REFTEL DETAILED MOST OF DIALOGUE BETWEEN N.Y. FEDERAL RESERVE FIRST VICE PRESIDENT RICHARD DEBS AND MEMBERS OF THE SAUDI FINANCIAL ESTABLISHMENT, INCLUDING SAMA AND THE MINISTRY OF FINANCE CONCERNING THE PURCHASE OF U.S. GOVERNMENT BONDS. A SEPARATE AND WIDER SUBJECT (ALTHOUGH RELATED TO MASSIVE PURCHASES OF USG BONDS AS A MAJOR OUTLET AND PERHAPS THE MAJOR OUTLET FOR OIL PRODUCER COUNTRY RESERVES) IS THE SUBJECT OF MAINTENANCE VALUE. THIS SUBJECT HAS COME UP IN NUMEROUS PREVIOUS CONVERSATIONS WITH GOVERNOR ANWAR ALI OF SAMA, BUT IT WAS HIGHLIGHTED DURING THE DEBS CONVERSATIONS AND PROBABLY MORE DEEPLY DISCUSSED THAN ON ANY PREVIOUS OCCASION.
2. THE SUBJECT IS IMPORTANT TO GOVERNOR ALI SINCE THE MOST DAMAGING CRITICISMS OF HIS HANDLING OF SAUDI FINANCES SINCE HE TOOK ON THE TASK 15 YEARS AGO HAVE RESULTED FROM LOSS OF REAL VALUE (OR CONVERTIBLE VALUE AT THE LEAST) OF THE SAUDI RESERVES DURING THE DOLLAR DEVALUATIONS OF 1972 AND 1973. IT IS ALL VERY WELL TO TELL THE SAUDIS THAT THERE IS A MORAL OBLIATION TO PRODUCE OIL FOR USE BY CONSUMING STATES BUT SAMA AND THE SAUDI FINANCIAL CARETAKERS WILL FACE INCREASINGLY VOCAL OPPOSITION IN GOVERNMENT COUNCILS THAT MAY WELL AFFECT OIL PRODUCING LEVELS UNLESS THEY CAN PROVE BASIC GROWTH IN ASSETS IS TAKING PLACE AT LEAST EQUAL TO THE POTENTIAL GROWTH IN VALUE FOR OIL IN THE GROUND.
3. WE WISH TO HIGHLIGHT THIS PROBLEM NOW AND SUGGEST THAT ONCE AGAIN THE U.S. MAY HAVE TO TAKE THE LEAD IN FINDING A WAY TO DEAL WITH THE EFFECTS OF INFLATION ON ASSETS OF OIL PRODUCING COUNTRIES. MUCH OF THE WIND COULD BE TAKEN OUT OF THE OPEC SAILS IN THEIR ARGUMENT FOR FURTHER IMMEDIATE PRICE INCREASES IN JUNE IF A PLEDGE COULD BE GIVEN THAT ASSETS WOULD BE GUARANTEED AGAINST DECREASES IN VALUE ASCRIBABLE TO INFLATION. IT SEEMS TO US THAT WITH THE COMPEITION FOR OIL PRODUCING COMPANY INVESTMENTS IN THE DEVELOPED ECONOMIES THERE WOULD BE A GOOD CHANCE OF OTHER COUNTRIES QUICKLY JOINING THE U.S. IN AN INDEXED SAVINGS SYSTEM AIMED AT REASSURING THE OPEC COUNTRIES AGAINST INFLATION. SUCH A SYSTEM COULD BE EASILY INTRODUCED FOR OUR GOVERNMENT BONDS AND PERHAPS FOR PRIVATE BONDS IN CERTAIN CIRCUMSTANCES. WHAT THE USG DECIDED TO DO EVEN IF ONLY IN THE WAY OF ANNOUNCED INTENTIONS, MIGHT BE ENOUGH TO FORESTALL THE USE BY OPEC OF THAT PARTICULAR ARGUMENT FOR INCREASING PRICES, WHICH IS CERTAINLY THE INTENTION OF ALMOST EVERY STATE EXCEPT SAUDI ARABIA. 4. V.P. DEBS (WHO SHOULD NOT BE CHARGED AT ALL WITH INSPIRING THIS IDEA) FORESEES MORE DIFFICULTIES WITH GUARANTEEING AGAINST DEPRECIATION OF THE DOLLAR. IN ANY CASE THIS IS PROBABLY OF LESS IMPORTANCE. IT IS POSSIBLE THAT A SPECIAL INDEXED BOND WOULD HAVE TO BE CREATED WHOSE MARKETABILITY WOULD BE ASSURED. IF SOMETHING CAN BE DONE ON THIS PROBLEM BEFORE THE CONTEMPLATED VISIT OF PRINCE FAHD IN LATE MAY, IT WOULD SERVE AS A CENTERPIECE OF OUR EFFORTS ON FISCAL COOPERATION WITH THE SAUDIS UNDER THE NEW AGREEMENT. AKINS
Source: https://www.wikileaks.org/plusd/cables/1974JIDDA02264_b.html
Summary: Timeline overview
1. REFTEL DETAILED MOST OF DIALOGUE BETWEEN N.Y. FEDERAL RESERVE FIRST VICE PRESIDENT RICHARD DEBS AND MEMBERS OF THE SAUDI FINANCIAL ESTABLISHMENT, INCLUDING SAMA AND THE MINISTRY OF FINANCE CONCERNING THE PURCHASE OF U.S. GOVERNMENT BONDS. A SEPARATE AND WIDER SUBJECT (ALTHOUGH RELATED TO MASSIVE PURCHASES OF USG BONDS AS A MAJOR OUTLET AND PERHAPS THE MAJOR OUTLET FOR OIL PRODUCER COUNTRY RESERVES) IS THE SUBJECT OF MAINTENANCE VALUE. THIS SUBJECT HAS COME UP IN NUMEROUS PREVIOUS CONVERSATIONS WITH GOVERNOR ANWAR ALI OF SAMA, BUT IT WAS HIGHLIGHTED DURING THE DEBS CONVERSATIONS AND PROBABLY MORE DEEPLY DISCUSSED THAN ON ANY PREVIOUS OCCASION.
2. THE SUBJECT IS IMPORTANT TO GOVERNOR ALI SINCE THE MOST DAMAGING CRITICISMS OF HIS HANDLING OF SAUDI FINANCES SINCE HE TOOK ON THE TASK 15 YEARS AGO HAVE RESULTED FROM LOSS OF REAL VALUE (OR CONVERTIBLE VALUE AT THE LEAST) OF THE SAUDI RESERVES DURING THE DOLLAR DEVALUATIONS OF 1972 AND 1973. IT IS ALL VERY WELL TO TELL THE SAUDIS THAT THERE IS A MORAL OBLIATION TO PRODUCE OIL FOR USE BY CONSUMING STATES BUT SAMA AND THE SAUDI FINANCIAL CARETAKERS WILL FACE INCREASINGLY VOCAL OPPOSITION IN GOVERNMENT COUNCILS THAT MAY WELL AFFECT OIL PRODUCING LEVELS UNLESS THEY CAN PROVE BASIC GROWTH IN ASSETS IS TAKING PLACE AT LEAST EQUAL TO THE POTENTIAL GROWTH IN VALUE FOR OIL IN THE GROUND.
3. WE WISH TO HIGHLIGHT THIS PROBLEM NOW AND SUGGEST THAT ONCE AGAIN THE U.S. MAY HAVE TO TAKE THE LEAD IN FINDING A WAY TO DEAL WITH THE EFFECTS OF INFLATION ON ASSETS OF OIL PRODUCING COUNTRIES. MUCH OF THE WIND COULD BE TAKEN OUT OF THE OPEC SAILS IN THEIR ARGUMENT FOR FURTHER IMMEDIATE PRICE INCREASES IN JUNE IF A PLEDGE COULD BE GIVEN THAT ASSETS WOULD BE GUARANTEED AGAINST DECREASES IN VALUE ASCRIBABLE TO INFLATION. IT SEEMS TO US THAT WITH THE COMPEITION FOR OIL PRODUCING COMPANY INVESTMENTS IN THE DEVELOPED ECONOMIES THERE WOULD BE A GOOD CHANCE OF OTHER COUNTRIES QUICKLY JOINING THE U.S. IN AN INDEXED SAVINGS SYSTEM AIMED AT REASSURING THE OPEC COUNTRIES AGAINST INFLATION. SUCH A SYSTEM COULD BE EASILY INTRODUCED FOR OUR GOVERNMENT BONDS AND PERHAPS FOR PRIVATE BONDS IN CERTAIN CIRCUMSTANCES. WHAT THE USG DECIDED TO DO EVEN IF ONLY IN THE WAY OF ANNOUNCED INTENTIONS, MIGHT BE ENOUGH TO FORESTALL THE USE BY OPEC OF THAT PARTICULAR ARGUMENT FOR INCREASING PRICES, WHICH IS CERTAINLY THE INTENTION OF ALMOST EVERY STATE EXCEPT SAUDI ARABIA. 4. V.P. DEBS (WHO SHOULD NOT BE CHARGED AT ALL WITH INSPIRING THIS IDEA) FORESEES MORE DIFFICULTIES WITH GUARANTEEING AGAINST DEPRECIATION OF THE DOLLAR. IN ANY CASE THIS IS PROBABLY OF LESS IMPORTANCE. IT IS POSSIBLE THAT A SPECIAL INDEXED BOND WOULD HAVE TO BE CREATED WHOSE MARKETABILITY WOULD BE ASSURED. IF SOMETHING CAN BE DONE ON THIS PROBLEM BEFORE THE CONTEMPLATED VISIT OF PRINCE FAHD IN LATE MAY, IT WOULD SERVE AS A CENTERPIECE OF OUR EFFORTS ON FISCAL COOPERATION WITH THE SAUDIS UNDER THE NEW AGREEMENT. AKINS
Source: https://www.wikileaks.org/plusd/cables/1974JIDDA02264_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974KUWAIT00706_b
SUMMARY: WELL ATTENDED THREE DAY SEMINAR ON SURPLUS FUNDS HERE
SHOWED GENERAL AWARENESS AMONG REPRESENTATIVES OF BOTH SURPLUS
AND DEFICIT STATES THAT SUDDEN TREMENDOUS INCOMES OF SIX MAJOR
ARAB OIL EXPORTING COUNTRIES CONSTITUTES POLITICAL AND ECONOMIC
"CHANCE OF A LIFETIME" BUT IT ALSO IMPOSES GREAT RESPONSIBILITIES
ON SURPLUS COUNTRIES TO USE MONEY SENSIBLY. IN GENERAL THERE WAS
AGREEMENT THAT MONEY SHOULD BE USED FIRST FOR LOCAL (E.G.
SAUDI OR KUWAITI) DEVELOPMENT, SECOND FOR AID TO OTHER ARAB
STATES, THIRD TO LDCS AND FINALLY AS INVESTMENTS IN TRADITIONAL
FINANCIAL MARKETS. NEVERTHELESS, IT WAS STRESSED THAT NEW CON-
DITIONS OBTAINED REQUIRING GREATER EQUALITY AND RECOGNITION
FOR SURPLUS ARAB STATES IN INTERNATIONAL FINANCIAL AFFAIRS.
DURING CONFERENCE SOME NEW IDEAS WERE FLOATED AND IT WAS REVEALED
THAT MAJOR NEW PETROLEUM INVESTMENT COMPANY IS TO BE FOUNDED BY
OAPEC AND THAT INTER-ARAB INVESTMENT GUARANTY CORPORATION ABOUT
TO BEGIN OPERATIONS SOON. OTHER RELATED MEETINGS ON OIL AND
MULTINATIONAL COMPANIES AS WELL AS A SECOND CONFERENCE ON
MONETARY MATTERS ARE BEING SCHEDULED TO TAKE PLACE DURING 1974.
EMBASSY BELIEVES PARTCIPATION BY SAUDI OFFICIALS WWS PARTICULARLY
NOTEWORTHY. END SUMMARY
1.HMORE THAN 200 ECONOMISTS FROM ARAB COUNTRIES, EUROPE, JAPAN, AND THE UNITED STATES MET FOR THREE DAYS FEB 18, 19, AND 20, IN KUWAIT TO DISCUSS SURPLUS REVENUES OF OIL PRODUCING COUNTRIES. IN SEVEN SESSIONS INAUGURATED BY CROWN PRINCE/PRIME MINISTER SHEIKH JABER AL-AHMAD AL-JABER AL-SABAH OF KUWAIT, ROLE OF ARAB SURPLUS FUNDS IN THE MONEY AND CAPITAL MARKETS IN THE WORLD AND ESTIMATES OF THE EXPECTED OIL REVENUES AND ABSORPTION CAPACITY OF ARAB STATES FOR DEVELOPMENT WERE DISCUSSED. IN ADDITION TO OBSERVERS FROM STATE, COMMERCE, TREASURY, FRB/NEW YORK AND EMBASSIES JIDDA AND KUWAIT, US PARTICIPANTS INCLUDED PROFESSORS FROM COLORADO AND RUTGERS WHO WERE AMONG FORMAL SPEAKERS. SOME BUSINESSMEN, IMF AND IBRD REPS WERE ALSO PRESENT.
2. DURING INITIAL SESSION FOLLOWING OPENING BY KUWAIT PM (REFTEL, NOTAL), KFAED DIRECTOR ABD AL-LATIF AL-HAMAD DEFINED MAJOR ISSUES AS FOLLOWS:
A. WILL THERE BE SURPLUSES; IF SO, HOW MUCH AND WHERE?
B. WHAT IS NATURE OF PROBLEM: SHORT, MEDIUM OR LONG TERMS?
C. SCENE HAS SHIFTED TO PRODUCING GOVERNMENTS WITH INTERNATIONAL OIL COMPANIES BEING SQUEEZED OUT. WHAT NEW INSTITUTIONS SHOULD REPLACE COMPANIES AND SERVE GOVERNMENTS?
D. WHAT NEW CRITERIA FOR DEVELOPMENT MUST BE DETERMINED? IT WILL BE NECESSARY TO MAINTAIN VALUE OF ASSETS INVESTED AND ENHANCE THE DEVELOPMENT PROSPECTS FOR ARAB/LDC STATES.
E. NEW PRICE ISSUES EXIST. HOW CAN PRODUCERS GAIN A FAIR PRICE FOR OIL, INFLATION BE COMBATTED AND INTERNATIONAL ECONOMIC EQUILIBRIUM BE MAINTAINED?
F. ATTENTION MUST BE PAID TO RESEARCH IN AREAS OF ALTERNATIVE SOURCES OF ENERGY, WATER AND ECONOMIC INSOCTUTIONS. AL- AMAD STRESSED THAT COOPERATION BETWEEN PRODUCERS AND MULTINATIONAL COMPANIES MIGHT OFFER SOLUTIONS TO SUCH PROBLEMS.
3. THE EXPECTED OIL REVENUES WERE ESTIMATED BY ECONOMISTS DURING THE NEXT 10 YEARS FOR 6 ARAB PRODUCING COUNTRIES AS REACHING $750 BILLION. PROJECTED SPENDING WOULD NOT EXCEED $350 BILLION AND THIS FIGURE WAS USED AS A BENCHMARK FOR ALL OF THE DISCUSSIONS. IT WAS AGREED THAT THE ARAB COUNTRIES COULD NOT ABSORB SUCH A FIGURE AND SEVERAL PAPERS DISCUSSED MEANS OF INCREASING THE INDUSTRIALIZATION AND IMPROVING THE AGRICULTURAL POSSIBILITIES OF THE ARAB WORLD. REGIONAL COOPERATION AND JOINT ENTERPRISES WERE DISCUSSED IN DETAIL AND POSSIBLE IMPROVEMENT OF THE INVESTMENT CLIMATE IN SUCH COUNTRIES AS EGYPT WERE DISCUSSED AT LENGTH BY THE ARAB HEAD OF THE INTERNATIONAL BANK, NAZNY ABDELHAMID.
4. SOME INGENIOUS IDEAS WERE DEVELOPED BY BOTH AMERICAN AND OXFORD TRAINED ECONOMISTS INCLUDING INDEXED BONDS AND AN INTERNATIONAL UNIT TRUST FOR STABILIZING PORTFOLIOS OF THE ARAB COUNTRIES. IN SUMMARIZING DISCUSSIONS ON MONETARY MATTERS, THERE WAS CLEAR DISAGREEMENT ON THE QUESTION OF INTERNATIONALIZATION OF FUNDS FOR USE OF SURPLUSES WITH MANY OPINIONS BEING EXPRESSED THAT IT WAS BETTER TO LEAVE THE FUNDS IN ARAB HANDS.
5. RE QUESTION OF HELPING THIRD WORLD COUNTRIES (SO-CALLED "NOPEC"), SEVERAL PARTICIPANTS SUGGESTED THAT IT WOULD BE GOOD STRATEGY FOR ARABS TO FIND A MEANS TO PICK UP ALL OR MOST OF THE $10 BILLION ADDED OIL BILL AS A MEANS OF GAINING POLITICAL SUPPORT FOR MAINTAINING HIGHER OIL PRICES AND "BUY OFF THE OPPOSITION OF THE THIRD WORLD". IT WAS ALSO AGREED THAT IT WOULD HELP TO DIVERSIFY ARAB INVESTMENTS TO PLACE SOME OF THE SURPLUS FUNDS IN THE THIRD WORLD.
6. OAPEC SECRETARY GENERAL DR. ALI ATIQA REVEALED THAT MAJOR PETROLEUM INVESTMENT COMPANY ABOUT TO BE FORMED UNDER THAT ORGANIZATION. ATIQA SAID THAT FINAL AGREEMENT ON NEW PETROLEUM COMPANY AIMED AT INVESTING IN THE PETROCHEMICALS AND REFINERY INDUSTRIES IN ARAB EXPORTING COUNTRIES HAD BEEN MADE TWO WEEKS AGO IN JIDDA. HE ESTIMATED THAT REFINERIES ALONE BEING DISCUSSED WOKWD REQUIRE $6 BILLION IN INVESTMENT AND THE PETROCHEMICALS INDUSTRIES WOULD BE IN THE "TENS OF BILLIONS". OAPEC ECONOMIST MOHAMMAD TAHIR LATER INFORMED U.S. OBSERVER THAT NO DECISION HAD BEEN MADE TO INCLUDE EXPLORATION NEW SOURCES OF PETROLEUM IN OBJECTIVES OF THE COMPANY BUT THAT PRACTICALLY ALL OTHER PETROLEUM RELATED INDUSTRIES WERE BEING CONSIDERED.
7. THE SHARPEST DIVERSION IN APPROACH BECAME CLEAR WHEN DISCUSSIONS TURNED TO USING SURPLUS FUNDS IN ARAB COUNTRIES WHERE INVESTMENT CLIMATE HAS BEEN POOR. HOWEVER, THERE WERE ONLY NOMINAL REFERENCES TO PUBLIC VS. PRIVATE SECTOR INVESTMENTS DESPITE PRESENCE OF PUBLIC SECTOR EGYPTIAN AND SYRIAN ECONOMISTS AND OFFICIALS. ONE SPEAKER SAID INTER-ARAB INVESTMENT GUARANTY CORPORATION WILL BEGIN OPERATION IN TWO MONTHS.
8. SAUDI OBSERVERS INCLUDED DEPUTY MINISTER FINANCE A.A. RASHID AND SAMA FOREIGN EXCHANGE CHIEF AHMAD ABDULATIF. THE LATTER SUGGESTED AT ONE POINT THAT SAUDI ARABIA WAS INTERESTED IN SEEING A NEW INTERNATIONAL MONETARY ORGANIZATION WITH SOME OF THE CHARACTERISTICS OF THE IMF AND THE BANK OF INTERNATIONAL SETTLEMENTS.
9. ORGANIZERS OF THE SEMINAR WHICH WAS PARTLY FUNDED BY UN ECONOMIC COMMISSION FOR WEST ASIA AND THE ARAB PLANNING INSTITUTE, ARE ALREADY ORGANIZING A SECOND AND THIRD SEMINAR ON RELATED TOPICS ON ALL FACETS OF PETROLEUM INCLUDING PRODUCTION PROGRAM FOR TRIPOLI IN APRIL, AND ANOTHER ON MULTINATIONALS AND DEVELOPMENT IN BEIRUT IN JULY.
10. COMMENT: MEETING WAS WELL-HANDLED BY KUWAITI ORGANIZERS AND DISCUSSIONS IN GENERAL WERE CONDUCTED IN CALM, PROFESSIONAL MANNER WITH POLITICAL COMMENTARY KEPT TO MINIMUM. NONETHELESS, SOME SPEAKERS NOTED POLITICAL IMPLICATIONS OF ARAB WEALTH WITH OAPEC SYG ATIQA ARGUING THAT ARABS SHOULD CONTRIBUTE LARGER AMOUNTS AND THEREFORE GAIN GREATER POLITICAL INFLUENCE IN IMF, IBRD, UNDP, ETC. AS MIGHT HAVE BEEN EXPECTED, REPRESENTATIVES FROM DEFICIT COUNTRIES URGED THAT GREAT PORTION OF SURPLUS FUNDS BE SPENT IN ARAB WORLD WHILE KUWAITIS, SAUDIS AND REPRESENTATIVE OF ABU DHABI FUND, WHILE ACCEPTING MORAL OBLIGATION TO DO SO, ALSO RESERVED RIGHT INVEST EITHER AT HOME OR IN TRADITIONAL INTERNATIONAL FINANCIAL MARKETS. EMBASSY KUWAIT BELIEVES BOTH IN ORGANIZING SEMINAR AND IN REMARKS DURING SEMINAR KUWAITIS OR NON-KUWAITIS ASSOCIATED WITH KUWAITI ORGANIZATIONS REVEALED EXISTENCE HERE OF SOMEWHAT GREATER AWARENESS OF ISSUES INVOLVED THAN ELSEWHERE IN ARAB WORLD. ON OTHER HAND, AS INDICATED IN PARA 8, SAUDIS ALSO PLAYED USEFUL ROLE AT SEMINAR. FYI ONE COULD ALMOST FEEL INTENSITY OF INTEREST OVER WHAT SAUDI OFFICIAL SAID COMPARED TO REMARKS OF PROFESSORS FROM EGYPT OR LEBANON. END FYI. BELIEVE SAUDIS MAY HAVE GAINED USEFUL INSIGHTS FROM EXPOSURE TO VARIETY OF VIEWS AND IN THIS REGARD BELIEVE SAUDI PARTICIPATION WAS USEFUL. IN GENERAL SEMINAR WAS USEFUL IN PROVIDING FIRST BROAD DISCUSSION AMONG MANY ARABS TOGETHER WITH OTHERS OVER SURPLUS FUNDS ISSUES SINCE JANUARY PRICE RISES. STOLTZFUS
Source: https://www.wikileaks.org/plusd/cables/1974KUWAIT00706_b.html
Summary: Timeline overview
1.HMORE THAN 200 ECONOMISTS FROM ARAB COUNTRIES, EUROPE, JAPAN, AND THE UNITED STATES MET FOR THREE DAYS FEB 18, 19, AND 20, IN KUWAIT TO DISCUSS SURPLUS REVENUES OF OIL PRODUCING COUNTRIES. IN SEVEN SESSIONS INAUGURATED BY CROWN PRINCE/PRIME MINISTER SHEIKH JABER AL-AHMAD AL-JABER AL-SABAH OF KUWAIT, ROLE OF ARAB SURPLUS FUNDS IN THE MONEY AND CAPITAL MARKETS IN THE WORLD AND ESTIMATES OF THE EXPECTED OIL REVENUES AND ABSORPTION CAPACITY OF ARAB STATES FOR DEVELOPMENT WERE DISCUSSED. IN ADDITION TO OBSERVERS FROM STATE, COMMERCE, TREASURY, FRB/NEW YORK AND EMBASSIES JIDDA AND KUWAIT, US PARTICIPANTS INCLUDED PROFESSORS FROM COLORADO AND RUTGERS WHO WERE AMONG FORMAL SPEAKERS. SOME BUSINESSMEN, IMF AND IBRD REPS WERE ALSO PRESENT.
2. DURING INITIAL SESSION FOLLOWING OPENING BY KUWAIT PM (REFTEL, NOTAL), KFAED DIRECTOR ABD AL-LATIF AL-HAMAD DEFINED MAJOR ISSUES AS FOLLOWS:
A. WILL THERE BE SURPLUSES; IF SO, HOW MUCH AND WHERE?
B. WHAT IS NATURE OF PROBLEM: SHORT, MEDIUM OR LONG TERMS?
C. SCENE HAS SHIFTED TO PRODUCING GOVERNMENTS WITH INTERNATIONAL OIL COMPANIES BEING SQUEEZED OUT. WHAT NEW INSTITUTIONS SHOULD REPLACE COMPANIES AND SERVE GOVERNMENTS?
D. WHAT NEW CRITERIA FOR DEVELOPMENT MUST BE DETERMINED? IT WILL BE NECESSARY TO MAINTAIN VALUE OF ASSETS INVESTED AND ENHANCE THE DEVELOPMENT PROSPECTS FOR ARAB/LDC STATES.
E. NEW PRICE ISSUES EXIST. HOW CAN PRODUCERS GAIN A FAIR PRICE FOR OIL, INFLATION BE COMBATTED AND INTERNATIONAL ECONOMIC EQUILIBRIUM BE MAINTAINED?
F. ATTENTION MUST BE PAID TO RESEARCH IN AREAS OF ALTERNATIVE SOURCES OF ENERGY, WATER AND ECONOMIC INSOCTUTIONS. AL- AMAD STRESSED THAT COOPERATION BETWEEN PRODUCERS AND MULTINATIONAL COMPANIES MIGHT OFFER SOLUTIONS TO SUCH PROBLEMS.
3. THE EXPECTED OIL REVENUES WERE ESTIMATED BY ECONOMISTS DURING THE NEXT 10 YEARS FOR 6 ARAB PRODUCING COUNTRIES AS REACHING $750 BILLION. PROJECTED SPENDING WOULD NOT EXCEED $350 BILLION AND THIS FIGURE WAS USED AS A BENCHMARK FOR ALL OF THE DISCUSSIONS. IT WAS AGREED THAT THE ARAB COUNTRIES COULD NOT ABSORB SUCH A FIGURE AND SEVERAL PAPERS DISCUSSED MEANS OF INCREASING THE INDUSTRIALIZATION AND IMPROVING THE AGRICULTURAL POSSIBILITIES OF THE ARAB WORLD. REGIONAL COOPERATION AND JOINT ENTERPRISES WERE DISCUSSED IN DETAIL AND POSSIBLE IMPROVEMENT OF THE INVESTMENT CLIMATE IN SUCH COUNTRIES AS EGYPT WERE DISCUSSED AT LENGTH BY THE ARAB HEAD OF THE INTERNATIONAL BANK, NAZNY ABDELHAMID.
4. SOME INGENIOUS IDEAS WERE DEVELOPED BY BOTH AMERICAN AND OXFORD TRAINED ECONOMISTS INCLUDING INDEXED BONDS AND AN INTERNATIONAL UNIT TRUST FOR STABILIZING PORTFOLIOS OF THE ARAB COUNTRIES. IN SUMMARIZING DISCUSSIONS ON MONETARY MATTERS, THERE WAS CLEAR DISAGREEMENT ON THE QUESTION OF INTERNATIONALIZATION OF FUNDS FOR USE OF SURPLUSES WITH MANY OPINIONS BEING EXPRESSED THAT IT WAS BETTER TO LEAVE THE FUNDS IN ARAB HANDS.
5. RE QUESTION OF HELPING THIRD WORLD COUNTRIES (SO-CALLED "NOPEC"), SEVERAL PARTICIPANTS SUGGESTED THAT IT WOULD BE GOOD STRATEGY FOR ARABS TO FIND A MEANS TO PICK UP ALL OR MOST OF THE $10 BILLION ADDED OIL BILL AS A MEANS OF GAINING POLITICAL SUPPORT FOR MAINTAINING HIGHER OIL PRICES AND "BUY OFF THE OPPOSITION OF THE THIRD WORLD". IT WAS ALSO AGREED THAT IT WOULD HELP TO DIVERSIFY ARAB INVESTMENTS TO PLACE SOME OF THE SURPLUS FUNDS IN THE THIRD WORLD.
6. OAPEC SECRETARY GENERAL DR. ALI ATIQA REVEALED THAT MAJOR PETROLEUM INVESTMENT COMPANY ABOUT TO BE FORMED UNDER THAT ORGANIZATION. ATIQA SAID THAT FINAL AGREEMENT ON NEW PETROLEUM COMPANY AIMED AT INVESTING IN THE PETROCHEMICALS AND REFINERY INDUSTRIES IN ARAB EXPORTING COUNTRIES HAD BEEN MADE TWO WEEKS AGO IN JIDDA. HE ESTIMATED THAT REFINERIES ALONE BEING DISCUSSED WOKWD REQUIRE $6 BILLION IN INVESTMENT AND THE PETROCHEMICALS INDUSTRIES WOULD BE IN THE "TENS OF BILLIONS". OAPEC ECONOMIST MOHAMMAD TAHIR LATER INFORMED U.S. OBSERVER THAT NO DECISION HAD BEEN MADE TO INCLUDE EXPLORATION NEW SOURCES OF PETROLEUM IN OBJECTIVES OF THE COMPANY BUT THAT PRACTICALLY ALL OTHER PETROLEUM RELATED INDUSTRIES WERE BEING CONSIDERED.
7. THE SHARPEST DIVERSION IN APPROACH BECAME CLEAR WHEN DISCUSSIONS TURNED TO USING SURPLUS FUNDS IN ARAB COUNTRIES WHERE INVESTMENT CLIMATE HAS BEEN POOR. HOWEVER, THERE WERE ONLY NOMINAL REFERENCES TO PUBLIC VS. PRIVATE SECTOR INVESTMENTS DESPITE PRESENCE OF PUBLIC SECTOR EGYPTIAN AND SYRIAN ECONOMISTS AND OFFICIALS. ONE SPEAKER SAID INTER-ARAB INVESTMENT GUARANTY CORPORATION WILL BEGIN OPERATION IN TWO MONTHS.
8. SAUDI OBSERVERS INCLUDED DEPUTY MINISTER FINANCE A.A. RASHID AND SAMA FOREIGN EXCHANGE CHIEF AHMAD ABDULATIF. THE LATTER SUGGESTED AT ONE POINT THAT SAUDI ARABIA WAS INTERESTED IN SEEING A NEW INTERNATIONAL MONETARY ORGANIZATION WITH SOME OF THE CHARACTERISTICS OF THE IMF AND THE BANK OF INTERNATIONAL SETTLEMENTS.
9. ORGANIZERS OF THE SEMINAR WHICH WAS PARTLY FUNDED BY UN ECONOMIC COMMISSION FOR WEST ASIA AND THE ARAB PLANNING INSTITUTE, ARE ALREADY ORGANIZING A SECOND AND THIRD SEMINAR ON RELATED TOPICS ON ALL FACETS OF PETROLEUM INCLUDING PRODUCTION PROGRAM FOR TRIPOLI IN APRIL, AND ANOTHER ON MULTINATIONALS AND DEVELOPMENT IN BEIRUT IN JULY.
10. COMMENT: MEETING WAS WELL-HANDLED BY KUWAITI ORGANIZERS AND DISCUSSIONS IN GENERAL WERE CONDUCTED IN CALM, PROFESSIONAL MANNER WITH POLITICAL COMMENTARY KEPT TO MINIMUM. NONETHELESS, SOME SPEAKERS NOTED POLITICAL IMPLICATIONS OF ARAB WEALTH WITH OAPEC SYG ATIQA ARGUING THAT ARABS SHOULD CONTRIBUTE LARGER AMOUNTS AND THEREFORE GAIN GREATER POLITICAL INFLUENCE IN IMF, IBRD, UNDP, ETC. AS MIGHT HAVE BEEN EXPECTED, REPRESENTATIVES FROM DEFICIT COUNTRIES URGED THAT GREAT PORTION OF SURPLUS FUNDS BE SPENT IN ARAB WORLD WHILE KUWAITIS, SAUDIS AND REPRESENTATIVE OF ABU DHABI FUND, WHILE ACCEPTING MORAL OBLIGATION TO DO SO, ALSO RESERVED RIGHT INVEST EITHER AT HOME OR IN TRADITIONAL INTERNATIONAL FINANCIAL MARKETS. EMBASSY KUWAIT BELIEVES BOTH IN ORGANIZING SEMINAR AND IN REMARKS DURING SEMINAR KUWAITIS OR NON-KUWAITIS ASSOCIATED WITH KUWAITI ORGANIZATIONS REVEALED EXISTENCE HERE OF SOMEWHAT GREATER AWARENESS OF ISSUES INVOLVED THAN ELSEWHERE IN ARAB WORLD. ON OTHER HAND, AS INDICATED IN PARA 8, SAUDIS ALSO PLAYED USEFUL ROLE AT SEMINAR. FYI ONE COULD ALMOST FEEL INTENSITY OF INTEREST OVER WHAT SAUDI OFFICIAL SAID COMPARED TO REMARKS OF PROFESSORS FROM EGYPT OR LEBANON. END FYI. BELIEVE SAUDIS MAY HAVE GAINED USEFUL INSIGHTS FROM EXPOSURE TO VARIETY OF VIEWS AND IN THIS REGARD BELIEVE SAUDI PARTICIPATION WAS USEFUL. IN GENERAL SEMINAR WAS USEFUL IN PROVIDING FIRST BROAD DISCUSSION AMONG MANY ARABS TOGETHER WITH OTHERS OVER SURPLUS FUNDS ISSUES SINCE JANUARY PRICE RISES. STOLTZFUS
Source: https://www.wikileaks.org/plusd/cables/1974KUWAIT00706_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1973JIDDA03428_b
1. ROYAL DECREE ISSUED AFTERNOON OF AUGUST 11 SETTING NEW
RATE FOR RIYAL IN TERMS OF GOLD EFFECTIVELY REVALUING BY
5.078 PERCENT (RPT 5.078 PERCENT) A SURPRISINGLY MODEST
CHANGE.
2. EXACT NEW RATES ARE AS FOLLOWS: SAMA RATE FOR BUYING DOLLARS IS 3.545 RIYALS AND SELLING RATE SET AT 3.555. OFFICIAL VALUE OF RIYAL IS 28.16 CENTS (RPT 28.16 CENTS). ONE HUNDRED RIYALS AT THE OLD RATE WOULD BE WORTH 95.1675 AT NEW RATE.
3. LOCAL NEWS MEDIA EMPHASIZED THE NECESSITY OF RE- VALUATION TO PREVENT FURTHER GREAT HARM TO THE RIYAL ECONOMY FOLLOWING THE DOUBLE DOLLAR DEVALUATIONS. EDI- TORIAL IN NADWA AUGUST 12 NOTED NEW RATE GIVEN ONLY IN TERMS OF GOLD AND SAID THAT THIS MADE CLEAR RIYAL WAS NO LONGER CONNECTED WITH DOLLAR CURRENCY AND IS A TRUE NATIONAL AND INDEPENDENT CURRENCY. AN AL MEDINA GUEST EDITOR ALSO NOTED RIYAL WAS NO LONGER DIRECTLY CONNECTED WITH AND WAS FAR REMOVED FROM THE DOLLAR EXCHANGE MARKETS. THERE IS HOPE, HE WROTE, THAT THE RIYAL ITSELF MIGHT NOW BE STRONG ENOUGH TO BE ACCEPTED BY OTHER COUNTRIES TO FINANCE SAUDI IMPORTS.
4. LOCAL SOURCES AGREE GOVERNOR ALI OF SAUDI MONETARY AGENCY (SAMA) HAD ARGUED AGAINST ADJUSTMENT AT THIS TIME ON BASIS THAT IT WAS COUNTERPRODUCTIVE TO KINGDOM'S BASIC POLICY OF SEEKING TO INDUSTRIALIZE. BY CHEAPENING IMPORTS AND MAKING POTENTIAL EXPORTS MORE EXPENSIVE, HE REPORTEDLY CONTENDED SAG NOT FOLLOWING CONSISTENT MONETARY AND IN- DUSTRIALIZATION POLICIES. MODEST RATE CHANGE APPEARS TO BE A COMPROMISE WITH OTHER BOTH WITHIN AND OUTSIDE GOVERN- MENT.
5. LOCAL BANKING FIGURES VIEW REVALUATION AS POTENTIALLY DISAPPOINTING IN PURELY MONETARY TERMS OF RESTORING CONFIDENCE IN DOLLAR-RIYAL EXCHANGE MOVEMENTS. BUSINESS- MEN FEEL MINIMAL REVALUATION MORE PSYCHOLOGICAL THAN ECONOMIC IN ITS IMPORTANCE. THACHER
Source: https://www.wikileaks.org/plusd/cables/1973JIDDA03428_b.html
Summary: Timeline overview
2. EXACT NEW RATES ARE AS FOLLOWS: SAMA RATE FOR BUYING DOLLARS IS 3.545 RIYALS AND SELLING RATE SET AT 3.555. OFFICIAL VALUE OF RIYAL IS 28.16 CENTS (RPT 28.16 CENTS). ONE HUNDRED RIYALS AT THE OLD RATE WOULD BE WORTH 95.1675 AT NEW RATE.
3. LOCAL NEWS MEDIA EMPHASIZED THE NECESSITY OF RE- VALUATION TO PREVENT FURTHER GREAT HARM TO THE RIYAL ECONOMY FOLLOWING THE DOUBLE DOLLAR DEVALUATIONS. EDI- TORIAL IN NADWA AUGUST 12 NOTED NEW RATE GIVEN ONLY IN TERMS OF GOLD AND SAID THAT THIS MADE CLEAR RIYAL WAS NO LONGER CONNECTED WITH DOLLAR CURRENCY AND IS A TRUE NATIONAL AND INDEPENDENT CURRENCY. AN AL MEDINA GUEST EDITOR ALSO NOTED RIYAL WAS NO LONGER DIRECTLY CONNECTED WITH AND WAS FAR REMOVED FROM THE DOLLAR EXCHANGE MARKETS. THERE IS HOPE, HE WROTE, THAT THE RIYAL ITSELF MIGHT NOW BE STRONG ENOUGH TO BE ACCEPTED BY OTHER COUNTRIES TO FINANCE SAUDI IMPORTS.
4. LOCAL SOURCES AGREE GOVERNOR ALI OF SAUDI MONETARY AGENCY (SAMA) HAD ARGUED AGAINST ADJUSTMENT AT THIS TIME ON BASIS THAT IT WAS COUNTERPRODUCTIVE TO KINGDOM'S BASIC POLICY OF SEEKING TO INDUSTRIALIZE. BY CHEAPENING IMPORTS AND MAKING POTENTIAL EXPORTS MORE EXPENSIVE, HE REPORTEDLY CONTENDED SAG NOT FOLLOWING CONSISTENT MONETARY AND IN- DUSTRIALIZATION POLICIES. MODEST RATE CHANGE APPEARS TO BE A COMPROMISE WITH OTHER BOTH WITHIN AND OUTSIDE GOVERN- MENT.
5. LOCAL BANKING FIGURES VIEW REVALUATION AS POTENTIALLY DISAPPOINTING IN PURELY MONETARY TERMS OF RESTORING CONFIDENCE IN DOLLAR-RIYAL EXCHANGE MOVEMENTS. BUSINESS- MEN FEEL MINIMAL REVALUATION MORE PSYCHOLOGICAL THAN ECONOMIC IN ITS IMPORTANCE. THACHER
Source: https://www.wikileaks.org/plusd/cables/1973JIDDA03428_b.html
Summary: Timeline overview
Thursday, April 11, 2013
Monetary gold wikileaks - 1975STATE085749_b and 1975SAIGON05635_b
1. ON APRIL 14 DPTY PRIMIN FOR ECONIMICS HAO AND GOV FOR NATIONAL
BANK OF VIETNAM UYEN INFORMED MINECON AND USAID DIR OF GVN
INTENTION TO SHIP 15 TONS OF GOLD REMAINING SAIGON TO THE BANK
OF INTERNATIONAL SETTLEMENTS AS PRECAUTIONARY MEASURE FOR SAFEKEEPING
AND READY AVAILABILITY FOR OVERNIGHT SALE IF NEEDED TO MEET FURTHER
REQUIREMENTS. 5 TONS ARE REPORTED TO BE HELD AT BASEL.
2. GVN CONCERNED THAT UTMOST SECRECY SURROUND THIS OPERATION; HOWEVER, REUTERS DESPATCH HAS ALREADY PICKED UP INITIAL INQUIRIES IN SWITZERLAND CONCERNING TRANSPORTATION AND INSURANCE ARRANGE-MENTS. WE ARE ADVISING GVN TO SHIP TO FRB NY TO AVOID THE SWISS CONNECTION AND THEN PUBLICLY TO ANNOUNCE THE MOVE IN PREPARATION FOR FUTURE ARMS AND MUNITIONS PURCHASES IF REQUIRED.
3. REQUEST YOUR COMMENTS SOONEST ON ANY PROBLEMS, IF ANY, OF FRB RECEIPT AND STORAGE AND YOUR ASSESSMENT OF IMPACT ON CONGRESS OF CURRENT RUMORS CONCERNING GOLD MOVEMENTS AND YOUR JUDGMENT OF THE EFFECT OF PUBLIC ANNOUNCEMENT AS OUTLINED ABOVE TO SQUELCH SPECULATION.
4. ALTHOUGH THIS IS THE FIRST TIME WE HAVE BEEN OFFICIALLY TOLD OF INTENTION TO MOVE GOLD TO BANK OF INTERNATIONAL SETTLEMENTS IN SWITZERLAND, WE HAVE BEEN AWARE OF IT FOR SOME TIME THROUGH SOURCES AVAILABLE TO US IN US INTELLIGENCE COMMUNITY.
5. THEREFORE, WE HOPE WASHINGTON WILL DO WHATEVER IT CAN TO HELP CORRECT SUCH STORIES AS THAT APPEARING IN THIS WEEK'S TIME MAGAZINE UNDER CAPTION "GILDED EXILE", ALLEGING PLOT TO MOVE "THIEU-LON NOL GOLD" TO SWITZERLAND. WE UNDERSTAND STORY HAS BEEN PICKED UP BY WIRE SERVICES AND WIDELY CARRIED. IT OBVIOUSLY WILL BE VERY DAMAGING ON THE HILL. MARTIN UNQUOTE KISSINGER
Source: https://www.wikileaks.org/plusd/cables/1975SAIGON05192_b.html
and
Other links Sources:
https://www.wikileaks.org/plusd/cables/1975STATE087850_b.html
https://www.wikileaks.org/plusd/cables/1975STATE089899_b.html
https://www.wikileaks.org/plusd/cables/1975SAIGON05312_b.html
https://www.wikileaks.org/plusd/cables/1975SAIGON05362_b.html -> more links here abouit this topic.
1. GVN HAS DECIDED NOT TO SHIP GOLD AT THIS TIME.
2. THEREFORE REQUEST CONVEYED REFTELS IS CANCELLED. INFORM DOD, FRB TO STAND DOWN.
3. COOPERATION ALL PARTIES APPRECIATED. MARTIN NOTE BY OC/T: DISTRIBUTION COORDINATED WITH MR. JOHNSON, S/S-O, 4/26.
Source: https://www.wikileaks.org/plusd/cables/1975SAIGON05635_b.html
2. GVN CONCERNED THAT UTMOST SECRECY SURROUND THIS OPERATION; HOWEVER, REUTERS DESPATCH HAS ALREADY PICKED UP INITIAL INQUIRIES IN SWITZERLAND CONCERNING TRANSPORTATION AND INSURANCE ARRANGE-MENTS. WE ARE ADVISING GVN TO SHIP TO FRB NY TO AVOID THE SWISS CONNECTION AND THEN PUBLICLY TO ANNOUNCE THE MOVE IN PREPARATION FOR FUTURE ARMS AND MUNITIONS PURCHASES IF REQUIRED.
3. REQUEST YOUR COMMENTS SOONEST ON ANY PROBLEMS, IF ANY, OF FRB RECEIPT AND STORAGE AND YOUR ASSESSMENT OF IMPACT ON CONGRESS OF CURRENT RUMORS CONCERNING GOLD MOVEMENTS AND YOUR JUDGMENT OF THE EFFECT OF PUBLIC ANNOUNCEMENT AS OUTLINED ABOVE TO SQUELCH SPECULATION.
4. ALTHOUGH THIS IS THE FIRST TIME WE HAVE BEEN OFFICIALLY TOLD OF INTENTION TO MOVE GOLD TO BANK OF INTERNATIONAL SETTLEMENTS IN SWITZERLAND, WE HAVE BEEN AWARE OF IT FOR SOME TIME THROUGH SOURCES AVAILABLE TO US IN US INTELLIGENCE COMMUNITY.
5. THEREFORE, WE HOPE WASHINGTON WILL DO WHATEVER IT CAN TO HELP CORRECT SUCH STORIES AS THAT APPEARING IN THIS WEEK'S TIME MAGAZINE UNDER CAPTION "GILDED EXILE", ALLEGING PLOT TO MOVE "THIEU-LON NOL GOLD" TO SWITZERLAND. WE UNDERSTAND STORY HAS BEEN PICKED UP BY WIRE SERVICES AND WIDELY CARRIED. IT OBVIOUSLY WILL BE VERY DAMAGING ON THE HILL. MARTIN UNQUOTE KISSINGER
Source: https://www.wikileaks.org/plusd/cables/1975SAIGON05192_b.html
and
Other links Sources:
https://www.wikileaks.org/plusd/cables/1975STATE087850_b.html
https://www.wikileaks.org/plusd/cables/1975STATE089899_b.html
https://www.wikileaks.org/plusd/cables/1975SAIGON05312_b.html
https://www.wikileaks.org/plusd/cables/1975SAIGON05362_b.html -> more links here abouit this topic.
1. GVN HAS DECIDED NOT TO SHIP GOLD AT THIS TIME.
2. THEREFORE REQUEST CONVEYED REFTELS IS CANCELLED. INFORM DOD, FRB TO STAND DOWN.
3. COOPERATION ALL PARTIES APPRECIATED. MARTIN NOTE BY OC/T: DISTRIBUTION COORDINATED WITH MR. JOHNSON, S/S-O, 4/26.
Source: https://www.wikileaks.org/plusd/cables/1975SAIGON05635_b.html
Summary: Timeline overview |
Monetary gold wikileaks - 1975PARIS00508_b
1. LAROSIERE, DIRECTOR OF TREASURY IN FRENCH FINANCE
MINISTRY, HAS JUST PROVIDED US FOLLOWING DETAILED
DESCRIPTION OF TECHNIQUE TO BE USED IN WRITING UP
FRENCH GOLD STOCK ON BASIS OF MARKET RELATED PRICE
AS ENVISAGED DURING MARTINIQUE CONFERENCE.
(A) PROPOSAL WILL BE SUBMITTED TO BANK OF FRANCE BOARD FOR APPROVAL ON THURSDAY, JANUARY 9, AND REVALUA- TION WILL FIRST BE REFLECTED ON BANK'S BALANCE SHEET FOR THAT DATE, WHICH IS RELEASED TO PUBLIC ONE WEEK LATER - I.E., JANUARY 16. TOMORROW MORNING ECONOMICS MINISTER FOURCADE WILL INFORM ASSEMBLY FINANCE COMMITTEE OF DETAILS OF OPERATION, AND FOLLOWING APPROVAL BY BANK OF FRANCE BOARD, FRENCH GOVERNMENT WILL MAKE PUBLIC ANNOUNCEMENT THEREOF.
(B) FOR PURPOSES OF INITIAL REVALUATION, GOLD PRICE USED WILL BE MOST RECENT QUOTATION ON INTERNA- TIONAL GOLD MARKET - IN PRACTICE, LONDON - PRIOR TO OPERATION. THIS WILL BE QUOTATION FOR EITHER YESTERDAY OR TODAY (JANUARY 8). THIS DOLLAR PRICE WILL BE CONVERTED INTO FRENCH FRANCS AT FRANC-DOLLAR RATE QUOTED ON PARIS EXCHANGE MARKET ON SAME DAY.
(C) SUBSEQUENTLY GOLD STOCK WILL BE REVALUED EVERY SIX MONTHS - I.E., AS OF JUNE 30 AND DECEMBER 31. PRICE USED FOR THESE REVALUATIONS WILL BE AVERAGE OF QUOTATIONS ON INTERNATIONAL MARKET DURING THREE MONTHS IMMEDIATELY PRIOR TO DATE OF REVALUATION. THIS AVERAGE DOLLAR PRICE WILL THEN BE CONVERTED INTO FRENCH FRANCS AT LAST FRANC-DOLLAR RATE QUOTED ON PARIS EXCHANGE MARKET PRIOR TO DATE OF REVALUATION.
(D) FRANC PROFITS FROM REVALUATION WILL BE CREDITED TO ACCOUNT ON BOOKS OF BANK OF FRANCE ENTITLED, "RESERVE FROM REVALUATION OF GOLD STOCK." THIS ACCOUNT WILL BE ENTERED ON LIABILITIES SIDE OF BANK'S BALANCE SHEET UNDER SECTION RELATING TO CAPITAL OF BANK. IT WILL BE COMPLETELY STERILIZED, AND CONTRARY TO NORMAL RULE, WILL NOT ACCRUE TO FRENCH TREASURY. THUS OPERATION WILL HAVE NO EFFECTS ON EITHER BUDGET, MONEY SUPPLY OR ECONOMY. PROFITS OR LOSSES RESULTING FROM SUBSEQUENT SEMI-ANNUAL REVALUA- TIONS OF GOLD STOCK WILL BE IMPUTED TO SAME ACCOUNT.
(E) TERMS OF REVALUATION AND PROVISION ON STERILIZATION OF PROFITS THEREFROM WILL BE EMBODIED IN CONVENTION BETWEEN ECONOMICS AND FINANCE MINISTER AND GOVERNOR OF BANK OF FRANCE. CONTRARY TO PRESS REPORTS, WHICH ALLEGEDLY QUOTED FOURCADE, THIS CONVENTION WILL BE SUBMITTED TO PARLIAMENT FOR RATIFICATION DURING NEXT SESSION.
2. LAROSIERE SAID THAT TWO ALTERNATIVE TECHNIQUES HAD BEEN UNDER CONSIDERATION: THE ONE FINALLY ADOPTED AND ONE THAT WOULD HAVE INVOLVED WEEKLY REVALUATIONS BY BANK OF FRANCE ON BASIS OF LATEST GOLD PRICE. UNDER LATTER TECHNIQUE, PRICE ACTUALLY UTILIZED WOULD HAVE BEEN REDUCED BY "SAFETY MARGIN" TO MAKE ALLOWANCE FOR OFTEN ERRATIC MOVEMENTS OF FREE MARKET GOLD PRICE OVER SHORT TUN. (ECONOMICS MINISTER FOURCADE ACTUALLY MENTIONED THIS DEVICE TO PRESS; SEE PARIS 00327.) HOW- EVER, THERE WAS NO NEED FOR SAFETY MARGIN IN CONNECTION WITH SEMI-ANNUAL REVALUATION TECHNIQUE.
3. LAROSIERE SAID THAT METHOD FOR VALUING FOREIGN EXCHANGE RESERVES OF BANK OF FRANCE WOULD ALSO BE REVISED. HERETOFORE THEY HAVE BEEN VALUED ON BALANCE SHEET OF BANK OF FRANCE AT PAR VALUES OR CENTRAL RATES FOR CURRENCIES IN QUESTION (E.G., IN CASE OF DOLLAR, 4.60414 FRANCS). FOREIGN EXCHANGE HOLDINGS WILL HENCEFORTH BE REVALUED SEMI-ANNUALLY ON BASIS OF LAST RATE QUOTED ON PARIS EXCHANGE MARKET PRIOR TO DATE OF REVALUATION FOR EACH CURRENCY HELD IN RESERVES. HOLDINGS OF SDRS WILL LIKEWISE BE REVALUED SEMI-ANNUALLY AT LAST RATE FIXED BY IMF ACCORDING TO BASKET METHOD PRIOR TO DATE OF REVALUATION.
4. IN REPLY TO OUR QUESTION, LAROSIERE SAID FRENCH HAD NO INDICATION ANY OTHER EUROPEAN COUNTRY WOULD FOLLOW FRENCH EXAMPLE ON REVALUATION OF GOLD STOCK. AT YESTERDAY'S MEETING OF EC FINANCE MINISTERS IN LONDON, FOURCADE HAD INDICATED, WITHOUT GIVING PRECISE TIMING, THAT FRANCE WOULD SHORTLY PROCEED TO REVALUATION. HIS REMARKS HAD ELICITED NO COMMENT FROM OTHER DELEGATIONS.
5. COMMENT. AT $42.22 PER OUNCE, MULTIPLIED BY OLD CENTRAL RATE OF 4.60414 FRANCS PER DOLLAR, PRESENT VALUATION OF FRENCH GOLD STOCK IS 19,623 MILLION FRANCS. USING METHODOLOGY DESCRIBED BY LAROSIERE, WE HAVE MADE FOLLOWING ROUGH CALCULATIONS. ON JANUARY 7, GOLD CLOSED IN LONDON AT $169.50 PER OUNCE, AND DOLLAR WAS QUOTED AT 4.40 FRANCS ON PARIS EXCHANGE MARKET. ON THIS BASIS NEW VALUATION WOULD BE ABOUT 75.3 BILLION FRANCS AND WINDFALL PROFIT ABOUT 55.7 BILLION FRANCS. TODAY (JANUARY 8) GOLD PRICE IN LONDON ROSE TO $177, AND DOLLAR FELL TO 4.39 FRANCS IN PARIS. ON THIS BASIS, NEW VALUATION WOULD BE ABOUT 78.4 BILLION FRANCS AND PROFIT ABOUT 58.8 BILLION FRANCS. RUSH
Source: https://www.wikileaks.org/plusd/cables/1975PARIS00508_b.html
Summary: Timeline overview
(A) PROPOSAL WILL BE SUBMITTED TO BANK OF FRANCE BOARD FOR APPROVAL ON THURSDAY, JANUARY 9, AND REVALUA- TION WILL FIRST BE REFLECTED ON BANK'S BALANCE SHEET FOR THAT DATE, WHICH IS RELEASED TO PUBLIC ONE WEEK LATER - I.E., JANUARY 16. TOMORROW MORNING ECONOMICS MINISTER FOURCADE WILL INFORM ASSEMBLY FINANCE COMMITTEE OF DETAILS OF OPERATION, AND FOLLOWING APPROVAL BY BANK OF FRANCE BOARD, FRENCH GOVERNMENT WILL MAKE PUBLIC ANNOUNCEMENT THEREOF.
(B) FOR PURPOSES OF INITIAL REVALUATION, GOLD PRICE USED WILL BE MOST RECENT QUOTATION ON INTERNA- TIONAL GOLD MARKET - IN PRACTICE, LONDON - PRIOR TO OPERATION. THIS WILL BE QUOTATION FOR EITHER YESTERDAY OR TODAY (JANUARY 8). THIS DOLLAR PRICE WILL BE CONVERTED INTO FRENCH FRANCS AT FRANC-DOLLAR RATE QUOTED ON PARIS EXCHANGE MARKET ON SAME DAY.
(C) SUBSEQUENTLY GOLD STOCK WILL BE REVALUED EVERY SIX MONTHS - I.E., AS OF JUNE 30 AND DECEMBER 31. PRICE USED FOR THESE REVALUATIONS WILL BE AVERAGE OF QUOTATIONS ON INTERNATIONAL MARKET DURING THREE MONTHS IMMEDIATELY PRIOR TO DATE OF REVALUATION. THIS AVERAGE DOLLAR PRICE WILL THEN BE CONVERTED INTO FRENCH FRANCS AT LAST FRANC-DOLLAR RATE QUOTED ON PARIS EXCHANGE MARKET PRIOR TO DATE OF REVALUATION.
(D) FRANC PROFITS FROM REVALUATION WILL BE CREDITED TO ACCOUNT ON BOOKS OF BANK OF FRANCE ENTITLED, "RESERVE FROM REVALUATION OF GOLD STOCK." THIS ACCOUNT WILL BE ENTERED ON LIABILITIES SIDE OF BANK'S BALANCE SHEET UNDER SECTION RELATING TO CAPITAL OF BANK. IT WILL BE COMPLETELY STERILIZED, AND CONTRARY TO NORMAL RULE, WILL NOT ACCRUE TO FRENCH TREASURY. THUS OPERATION WILL HAVE NO EFFECTS ON EITHER BUDGET, MONEY SUPPLY OR ECONOMY. PROFITS OR LOSSES RESULTING FROM SUBSEQUENT SEMI-ANNUAL REVALUA- TIONS OF GOLD STOCK WILL BE IMPUTED TO SAME ACCOUNT.
(E) TERMS OF REVALUATION AND PROVISION ON STERILIZATION OF PROFITS THEREFROM WILL BE EMBODIED IN CONVENTION BETWEEN ECONOMICS AND FINANCE MINISTER AND GOVERNOR OF BANK OF FRANCE. CONTRARY TO PRESS REPORTS, WHICH ALLEGEDLY QUOTED FOURCADE, THIS CONVENTION WILL BE SUBMITTED TO PARLIAMENT FOR RATIFICATION DURING NEXT SESSION.
2. LAROSIERE SAID THAT TWO ALTERNATIVE TECHNIQUES HAD BEEN UNDER CONSIDERATION: THE ONE FINALLY ADOPTED AND ONE THAT WOULD HAVE INVOLVED WEEKLY REVALUATIONS BY BANK OF FRANCE ON BASIS OF LATEST GOLD PRICE. UNDER LATTER TECHNIQUE, PRICE ACTUALLY UTILIZED WOULD HAVE BEEN REDUCED BY "SAFETY MARGIN" TO MAKE ALLOWANCE FOR OFTEN ERRATIC MOVEMENTS OF FREE MARKET GOLD PRICE OVER SHORT TUN. (ECONOMICS MINISTER FOURCADE ACTUALLY MENTIONED THIS DEVICE TO PRESS; SEE PARIS 00327.) HOW- EVER, THERE WAS NO NEED FOR SAFETY MARGIN IN CONNECTION WITH SEMI-ANNUAL REVALUATION TECHNIQUE.
3. LAROSIERE SAID THAT METHOD FOR VALUING FOREIGN EXCHANGE RESERVES OF BANK OF FRANCE WOULD ALSO BE REVISED. HERETOFORE THEY HAVE BEEN VALUED ON BALANCE SHEET OF BANK OF FRANCE AT PAR VALUES OR CENTRAL RATES FOR CURRENCIES IN QUESTION (E.G., IN CASE OF DOLLAR, 4.60414 FRANCS). FOREIGN EXCHANGE HOLDINGS WILL HENCEFORTH BE REVALUED SEMI-ANNUALLY ON BASIS OF LAST RATE QUOTED ON PARIS EXCHANGE MARKET PRIOR TO DATE OF REVALUATION FOR EACH CURRENCY HELD IN RESERVES. HOLDINGS OF SDRS WILL LIKEWISE BE REVALUED SEMI-ANNUALLY AT LAST RATE FIXED BY IMF ACCORDING TO BASKET METHOD PRIOR TO DATE OF REVALUATION.
4. IN REPLY TO OUR QUESTION, LAROSIERE SAID FRENCH HAD NO INDICATION ANY OTHER EUROPEAN COUNTRY WOULD FOLLOW FRENCH EXAMPLE ON REVALUATION OF GOLD STOCK. AT YESTERDAY'S MEETING OF EC FINANCE MINISTERS IN LONDON, FOURCADE HAD INDICATED, WITHOUT GIVING PRECISE TIMING, THAT FRANCE WOULD SHORTLY PROCEED TO REVALUATION. HIS REMARKS HAD ELICITED NO COMMENT FROM OTHER DELEGATIONS.
5. COMMENT. AT $42.22 PER OUNCE, MULTIPLIED BY OLD CENTRAL RATE OF 4.60414 FRANCS PER DOLLAR, PRESENT VALUATION OF FRENCH GOLD STOCK IS 19,623 MILLION FRANCS. USING METHODOLOGY DESCRIBED BY LAROSIERE, WE HAVE MADE FOLLOWING ROUGH CALCULATIONS. ON JANUARY 7, GOLD CLOSED IN LONDON AT $169.50 PER OUNCE, AND DOLLAR WAS QUOTED AT 4.40 FRANCS ON PARIS EXCHANGE MARKET. ON THIS BASIS NEW VALUATION WOULD BE ABOUT 75.3 BILLION FRANCS AND WINDFALL PROFIT ABOUT 55.7 BILLION FRANCS. TODAY (JANUARY 8) GOLD PRICE IN LONDON ROSE TO $177, AND DOLLAR FELL TO 4.39 FRANCS IN PARIS. ON THIS BASIS, NEW VALUATION WOULD BE ABOUT 78.4 BILLION FRANCS AND PROFIT ABOUT 58.8 BILLION FRANCS. RUSH
Source: https://www.wikileaks.org/plusd/cables/1975PARIS00508_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974ECBRU04422_b
1. SUMMARY: THE EC COMMISSION IS DRAWING UP SPECIFIC PROPOSALS
FOR INTERNATIONAL BORROWING AND CONCERTED FLOATING--IDEAS WHICH IT ORIGINALLY RAISED AT THE EC COUNCIL (FINANCE) MEETING JUNE 6
(REFTEL). ON THE PREMISE THAT THE INTERNATIONAL BANKING SYSTEM
IS FACING SERIOUS PROBLEMS IN RECYCLING OIL REVENUES, THE
COMMISSION IS WORKING SERIOUSLY ON A PROPOSAL FOR (A) THE
FLOATING OF A MAJOR COMMUNITY LOAN FOR MEMBER STATES IN DEFICIT,
AND (B) THE CREATION OF A COMMUNITY FINANCIAL FUND THAT WOULD
ACT AS A MAJOR BANK IN THE EURODOLLAR MARKET. ON CONCERTED
FLOATING, THE COMMISSION IS REPORTEDLY TORN BETWEEN CREATION OF
A NEW SNAKE (VIEWED AS HIGHLY IMPROBABLE) AND A MECHANISM FOR
PLACING THE EXISTING MINI-SNAKE IN A "COMMUNITY" FRAMEWORK.
THE COMMISSION HAS PREPARED A BRIEF STATUS REPORT ON GOLD--
WITHOUT SPECIFIC PROPOSALS--BASED ON THE ZEIST PROPOSALS AND
THE C-20 MEETING IN WASHINGTON. THE COMMISSION'S IDEAS ON
THESE SUBJECTS ARE STILL VAGUE AND PRELIMINARY. THEY WILL BE
DEVELOPED FURTHER IN PREPARATION FOR DISCUSSION BY THE COUNCIL
(FINANCE) AT ITS NEXT MEETING JULY 15. END SUMMARY.
2. THE PROPOSALS ON RECYCLING, WHICH ARE STILL IN THE DIS- CUSSION STAGE, ASSUME A COMMUNITY DEFICIT OF $18 TO $20 BILLION PER YEAR, A NET SURPLUS OF OIL EXPORTERS OF $60 BILLION A YEAR AND A EURODOLLAR MARKET OF AT LEAST $160 BILLION. GROWTH IN EURODOLLAR CREDITS IS ESTIMATED AT $12 BILLION DURING THE FIRST QUARTER OF 1974 AS COMPARED WITH $21.5 BILLION IN ALL OF 1973.
3. THE PROPOSALS DRAW ATTENTION TO RECENT PROBLEMS OF THE EURODOLLAR MARKET IN RECYCLING--PARTICULARLY (A) VERY SHORT-TERM DEPOSITS (LESS THAN ONE MONTH); (B) PROGRESSIVE LOSS OF CON- FIDENCE DUE TO THE ABSENCE OF A LENDER OF LAST RESORT; (C) GROW- ING RISKS OF A LIQUIDITY CRISIS IN THE TRANSFORMING OF SHORT- TERM DEPOSITS INTO LONG-TERM LENDING; (D) CEILINGS ON DEPOSIT- ASSET RATIOS; AND (E) GROWING UNWILLINGNESS OF MANY INTERNATIONAL BANKS TO BORROW BEYOND CERTAIN LIMITS.
4. THE COMMISSION WOULD ENVISAGE TWO STEPS IN THE FACE OF THE ABOVE: THE FIRST WOULD BE THE PLACING OF A LARGE LOAN BY SOME COMMUNITY INSTITUTION WITHIN THE NEXT THREE OR FOUR MONTHS TO PROVIDE CREDITS TO DEFICIT MEMBER STATES ON CONDITIONS DETERMINED BY THE COMMUNITY. CONSILTATIONS WITH MAJOR BANKING GROUPS IN THE COMMUNITY CONCERNING SUCH AN OPERATION ARE REPORTEDLY UNDER WAY, AND THEIR REACTION IS VIEWED AS POSITIVE PROVIDED THAT THERE IS A MECHANISM FOR COMMUNITY RESPONSIBILITY OR THAT THE EC MONETARY COOPERATION FUND ACTS AS THE BORROWER, WHICH WOULD IMPLY COMMUNITY RESPONSIBILITY. THE SECOND STEP WOULD BE THE CREATION OF A COMMUNITY FINANCIAL FUND WHICH WOULD BE ABLE TO ACT AS A MAJOR BANKING ORGANIZATION IN THE EURODOLLAR MARKET. SUCH A FUND WOULD CONTRIBUTE GREATLY TO RESOLVING THE KEY PROBLEM OF DIFFERING MATURITIES ON THE BORROWING AND LENDING SIDE. THE FUND WOULD TAKE DEPOSITS AND LEND TO A NUMBER OF INSTITUTIONAL BORROWERS. IT WOULD BE A PERMANENT ORGANIZATION WHICH WOULD BE OPERATED BY THE EUROPEAN INVESTMENT BANK WITHIN THE FRAMEWORK OF DIRECTIVES DETERMINED BY THE GOVERNORS OF THE BANK. THE COMMISSION'S PROPOSALS ENVISAGE THAT SUCH A FUND WOULD BECOME A MOJOR FACTOR IN THE LONG-TERM MARKET AND OPERATE INCREASINGLY IN THE EURO-BOND MARKET, ON WHICH IT COULD FLOAT LONG-TERM BONDS EVENTUALLY DENOMINATED IN A COMMUNITY UNIT ACCOUNT.
5. THE COMMISSION WOULD GIVE ABSOLUTE PRIORITY IN THE NEAR FUTURE TO MAJOR BORROWING AS DESCRIBED ABOVE WITH THE CREATION OF A FINANCIAL FUND FOLLOWING AS SOON AS POSSIBLE THEREAFTER. OVER A LONGER PERIOD THE COMMISSION WOULD CONSIDER THE POSSIBILITY OF A COMMUNITY INSURANCE SYSTEM MODELED ON THE FDIC.
6. ALTHOUGH THE COMMISSION'S IDEAS ON RECYCLING SEEM AMBITIOUS, OUR SOURCES TELL US THE COMMISSION IS SUFFICIENTLY IMPRESSED WITH THE GRAVITY OF THE PROBLEM TO PRESS ITS IDEAS WITH VIGOR AND DETERMINATION.
7. COMMISSION OFFICIALS ARE ALSO PREPARING PROPOSALS ON SOME FORM OF CONCERTED FLOATING. THESE RANGE FROM A MAXIMALIST APPROACH INVOLVING CREATION OF A NEW "SNAKE" TO A MINIMALIST SOLUTION LIMITED TO SOME SORT OF COMMUNITY PARTICIPATION IN THE MANAGEMENT OF THE PRESENT MINI-SNAKE (THE FRG, DENMARK AND BENELUX, PLUS SWEDEN AND NORWAY). ALTHOUGH THERE IS SOME SUPPORT WITHIN THE COMMISSION FOR A NEW SNAKE, OUR SOURCES TELL US MOST COMMISSION MEMBERS HAVE REPORTEDLY REACTED NEGATIVELY-- AND WITH BEWILDERMENT--TO THIS RATHER SKETCHY PROPOSAL. THOSE WITH THIS ATTITUDE SAY THE TIME IS HARDLY RIPE FOR NEW MONETARY LIMITED OFFICIAL USE EXPERIMENTS AND INTERVENTION SYSTEMS--EVEN ASSUMING FLUCTUATION MARGINS CONSIDERABLY WIDER THAN THE CURRENT 2.25 PERCENT. LITTLE IS EXPECTED TO COME OF THIS INITIATIVE. ON THE OHTER HAND, THERE IS A STRONG DESIRE IN THE COMMISSION TO SEE AN END TO ADMINISTRATION OF THE MINI-SNAKE SOLELY BY THE PARTICIPATING NATIONS. THERE MAY THUS BE A SERIOUS EFFORT TO PLACE IT IN A COMMUNITY FRAMEWORK, WHICH WOULD IMPLY SOME COMMISSION PARTI- CIPATION AND BROADER CONSULTATION AMONG ALL THE MEMBER STATES.
8. AS YET THERE ARE NO CONCRETE COMMISSION PROPOSALS ON GOLD. COMMISSION SERVICES ARE DIGESTING THE AGREEMENT IN PRINCIPLE AT WASHINGTON ON USE OF GOLD AS COLLATERAL, TRYING TO DETERMINE PRECISELY WHAT WAS AGREED UPON AND ITS IMPLICATIONS, AND ASKING THEMSELVES WHERE THE COMMUNITY GOES FROM HERE. IT IS GENERALLY RECOGNIZED THAT ALL ANY OF THE NEEDIER MEMBER STATES REALLY WANT IS REVALUATION OF THEIR RESERVES--PROPOSALS ON GOLD SIMPLY BEING A MEANS TO THIS END. THESE MEMBER STATES MAY THEREFORE BE EX- PECTED TO PRESS FOR COMMUNITY PROPOSALS DESIGNED TO ACHIEVE THIS REVALUATION.
9. SO FAR THE COMMISSION HAS MERELY PREPARED A SHORT PAPER OUT- LINING THE CURRENT STATUS OF THE GOLD ISSUE WHILE RETAINING THE COMMUNITY'S ZEIST PROPOSLAS AS THE BASIS FOR EVENTUAL COMMUNITY INITIATIVES. ONE POINT ON WHICH THERE SEEMS TO BE UNANIMITY WITHIN THE COMMISSION IS THAT ANY SPECIFIC SOLUTIONS SHOULD NOT BE BILATERAL--SUCH AS A DIRECT ARRANGEMENT BETWEEN THE FRG AND ITALY--BUT RATHER SHOULD BE IN THE FRAMEWORK OF COMMUNITY INSTITUTIONS SUCH AS THE MONETARY COOPERATION FUND. ON THIS BASIS, ITALY'S GOLD WOULD BE PLEDGED TO THE FUND IN EXCHANGE FOR EC UNITS OF ACCOUNT. 10. THE EC COUNCIL (FINANCE) IS EXPECTED TO DISCUSS ALL THE ABOVE ISSUES AT ITS NEXT MEETING JULY 15. GREENWALD
Source: https://www.wikileaks.org/plusd/cables/1974BERN04676_b.html
Summary: Timeline overview
2. THE PROPOSALS ON RECYCLING, WHICH ARE STILL IN THE DIS- CUSSION STAGE, ASSUME A COMMUNITY DEFICIT OF $18 TO $20 BILLION PER YEAR, A NET SURPLUS OF OIL EXPORTERS OF $60 BILLION A YEAR AND A EURODOLLAR MARKET OF AT LEAST $160 BILLION. GROWTH IN EURODOLLAR CREDITS IS ESTIMATED AT $12 BILLION DURING THE FIRST QUARTER OF 1974 AS COMPARED WITH $21.5 BILLION IN ALL OF 1973.
3. THE PROPOSALS DRAW ATTENTION TO RECENT PROBLEMS OF THE EURODOLLAR MARKET IN RECYCLING--PARTICULARLY (A) VERY SHORT-TERM DEPOSITS (LESS THAN ONE MONTH); (B) PROGRESSIVE LOSS OF CON- FIDENCE DUE TO THE ABSENCE OF A LENDER OF LAST RESORT; (C) GROW- ING RISKS OF A LIQUIDITY CRISIS IN THE TRANSFORMING OF SHORT- TERM DEPOSITS INTO LONG-TERM LENDING; (D) CEILINGS ON DEPOSIT- ASSET RATIOS; AND (E) GROWING UNWILLINGNESS OF MANY INTERNATIONAL BANKS TO BORROW BEYOND CERTAIN LIMITS.
4. THE COMMISSION WOULD ENVISAGE TWO STEPS IN THE FACE OF THE ABOVE: THE FIRST WOULD BE THE PLACING OF A LARGE LOAN BY SOME COMMUNITY INSTITUTION WITHIN THE NEXT THREE OR FOUR MONTHS TO PROVIDE CREDITS TO DEFICIT MEMBER STATES ON CONDITIONS DETERMINED BY THE COMMUNITY. CONSILTATIONS WITH MAJOR BANKING GROUPS IN THE COMMUNITY CONCERNING SUCH AN OPERATION ARE REPORTEDLY UNDER WAY, AND THEIR REACTION IS VIEWED AS POSITIVE PROVIDED THAT THERE IS A MECHANISM FOR COMMUNITY RESPONSIBILITY OR THAT THE EC MONETARY COOPERATION FUND ACTS AS THE BORROWER, WHICH WOULD IMPLY COMMUNITY RESPONSIBILITY. THE SECOND STEP WOULD BE THE CREATION OF A COMMUNITY FINANCIAL FUND WHICH WOULD BE ABLE TO ACT AS A MAJOR BANKING ORGANIZATION IN THE EURODOLLAR MARKET. SUCH A FUND WOULD CONTRIBUTE GREATLY TO RESOLVING THE KEY PROBLEM OF DIFFERING MATURITIES ON THE BORROWING AND LENDING SIDE. THE FUND WOULD TAKE DEPOSITS AND LEND TO A NUMBER OF INSTITUTIONAL BORROWERS. IT WOULD BE A PERMANENT ORGANIZATION WHICH WOULD BE OPERATED BY THE EUROPEAN INVESTMENT BANK WITHIN THE FRAMEWORK OF DIRECTIVES DETERMINED BY THE GOVERNORS OF THE BANK. THE COMMISSION'S PROPOSALS ENVISAGE THAT SUCH A FUND WOULD BECOME A MOJOR FACTOR IN THE LONG-TERM MARKET AND OPERATE INCREASINGLY IN THE EURO-BOND MARKET, ON WHICH IT COULD FLOAT LONG-TERM BONDS EVENTUALLY DENOMINATED IN A COMMUNITY UNIT ACCOUNT.
5. THE COMMISSION WOULD GIVE ABSOLUTE PRIORITY IN THE NEAR FUTURE TO MAJOR BORROWING AS DESCRIBED ABOVE WITH THE CREATION OF A FINANCIAL FUND FOLLOWING AS SOON AS POSSIBLE THEREAFTER. OVER A LONGER PERIOD THE COMMISSION WOULD CONSIDER THE POSSIBILITY OF A COMMUNITY INSURANCE SYSTEM MODELED ON THE FDIC.
6. ALTHOUGH THE COMMISSION'S IDEAS ON RECYCLING SEEM AMBITIOUS, OUR SOURCES TELL US THE COMMISSION IS SUFFICIENTLY IMPRESSED WITH THE GRAVITY OF THE PROBLEM TO PRESS ITS IDEAS WITH VIGOR AND DETERMINATION.
7. COMMISSION OFFICIALS ARE ALSO PREPARING PROPOSALS ON SOME FORM OF CONCERTED FLOATING. THESE RANGE FROM A MAXIMALIST APPROACH INVOLVING CREATION OF A NEW "SNAKE" TO A MINIMALIST SOLUTION LIMITED TO SOME SORT OF COMMUNITY PARTICIPATION IN THE MANAGEMENT OF THE PRESENT MINI-SNAKE (THE FRG, DENMARK AND BENELUX, PLUS SWEDEN AND NORWAY). ALTHOUGH THERE IS SOME SUPPORT WITHIN THE COMMISSION FOR A NEW SNAKE, OUR SOURCES TELL US MOST COMMISSION MEMBERS HAVE REPORTEDLY REACTED NEGATIVELY-- AND WITH BEWILDERMENT--TO THIS RATHER SKETCHY PROPOSAL. THOSE WITH THIS ATTITUDE SAY THE TIME IS HARDLY RIPE FOR NEW MONETARY LIMITED OFFICIAL USE EXPERIMENTS AND INTERVENTION SYSTEMS--EVEN ASSUMING FLUCTUATION MARGINS CONSIDERABLY WIDER THAN THE CURRENT 2.25 PERCENT. LITTLE IS EXPECTED TO COME OF THIS INITIATIVE. ON THE OHTER HAND, THERE IS A STRONG DESIRE IN THE COMMISSION TO SEE AN END TO ADMINISTRATION OF THE MINI-SNAKE SOLELY BY THE PARTICIPATING NATIONS. THERE MAY THUS BE A SERIOUS EFFORT TO PLACE IT IN A COMMUNITY FRAMEWORK, WHICH WOULD IMPLY SOME COMMISSION PARTI- CIPATION AND BROADER CONSULTATION AMONG ALL THE MEMBER STATES.
8. AS YET THERE ARE NO CONCRETE COMMISSION PROPOSALS ON GOLD. COMMISSION SERVICES ARE DIGESTING THE AGREEMENT IN PRINCIPLE AT WASHINGTON ON USE OF GOLD AS COLLATERAL, TRYING TO DETERMINE PRECISELY WHAT WAS AGREED UPON AND ITS IMPLICATIONS, AND ASKING THEMSELVES WHERE THE COMMUNITY GOES FROM HERE. IT IS GENERALLY RECOGNIZED THAT ALL ANY OF THE NEEDIER MEMBER STATES REALLY WANT IS REVALUATION OF THEIR RESERVES--PROPOSALS ON GOLD SIMPLY BEING A MEANS TO THIS END. THESE MEMBER STATES MAY THEREFORE BE EX- PECTED TO PRESS FOR COMMUNITY PROPOSALS DESIGNED TO ACHIEVE THIS REVALUATION.
9. SO FAR THE COMMISSION HAS MERELY PREPARED A SHORT PAPER OUT- LINING THE CURRENT STATUS OF THE GOLD ISSUE WHILE RETAINING THE COMMUNITY'S ZEIST PROPOSLAS AS THE BASIS FOR EVENTUAL COMMUNITY INITIATIVES. ONE POINT ON WHICH THERE SEEMS TO BE UNANIMITY WITHIN THE COMMISSION IS THAT ANY SPECIFIC SOLUTIONS SHOULD NOT BE BILATERAL--SUCH AS A DIRECT ARRANGEMENT BETWEEN THE FRG AND ITALY--BUT RATHER SHOULD BE IN THE FRAMEWORK OF COMMUNITY INSTITUTIONS SUCH AS THE MONETARY COOPERATION FUND. ON THIS BASIS, ITALY'S GOLD WOULD BE PLEDGED TO THE FUND IN EXCHANGE FOR EC UNITS OF ACCOUNT. 10. THE EC COUNCIL (FINANCE) IS EXPECTED TO DISCUSS ALL THE ABOVE ISSUES AT ITS NEXT MEETING JULY 15. GREENWALD
Source: https://www.wikileaks.org/plusd/cables/1974BERN04676_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974BRUSSE02610_b
1. SENIOR BELGIAN FINANCE MINISTRY OFFICIAL GAVE EMBOFF
APRIL 30 A COPY OF THE BELGIAN TEXT (IN FRENCH) OF THE
EEC FINMIN/CENTRAL BANKERS AGREEMENT REACHED AT ZEIST
APRIL 22-23. HE NOTED THAT
THERE WAS NO "OFFICIAL" TEXT OF THE AGREEMENT SINCE EACH DELEGATION MADE ITS OWN RECORD OF WHAT WAS AGREED UPON.
AT UK SUGGESTION, NO TIME WAS "WASTED" IN DRAFTING AN
AGREED TEXT.
2. ACCORDING TO BELGIAN TEXT, THE PROPOSAL AGREED UPON AT ZEIST WOULD ALLOW THE MEMBER CENTRAL BANKS TO BUY OR SELL GOLD FREELY AT "MARKET RELATED" PRICES. A MOVABLE BAND (E.G. A SNAKE) WOULD BE ESTABLISHED WITHIN WHICH CENTRAL BANKERS COULD NEGOTIATE SALES/PURCHASES BETWEEN THEMSELVES OR IN THE MARKET. ALTERNATIVELY, CENTRAL BANKS MIGHT BE ALLOWED TO SELL GOLD TO EUROPEAN MONETARY COOPERATION FUND (FECOM) FOR EUROPEAN UNITS OF ACCOUNT WHICH THE BANKS COULD THEN USE TO BUY EEC CURRENCIES FROM OTHER CENTRAL BANKS.
3. BELGIAN TEXT ALSO NOTES THAT "CERTAIN COUNTRIES" BELIEVE THAT NO OVERALL INCREASE IN GOLD STOCKS HELD BY MEMBER CENTRAL BANKS SHOULD BE PERMITTED IN THE SHORT OR MEDIUM TERM.
4. AFTER CONSULTATIONS IN WASHINGTON BETWEEN THE USG AND DUISENBERG/ZIJLSTRA NEXT WEEK, THE MEETING AGREED THAT THE G-20 DEPUTIES SHOULD BE BRIEFED IN PARIS MAY 7-9, THE EEC COUNCIL OF MINISTERS SHOULD BE BRIEFED ON MAY 20 AND THE MINISTERIAL G-20 SHOULD FURTHER DISCUSS THE MATTER IN WASHINGTON DURING JUNE.
5. IN COMMENTING TO EMBOFF ON THE TEXT, OUR SOURCE REMARKED THAT THE GOB ENVISIONS A QUITE WIDE BAND (SNAKE) WITH CENTRAL BANKS MEETING TO SET REVISIONS APPROXIMATELY ONCE A MONTH. HE ALSO FELT THAT THERE WILL NOT BE MANY TRANSACTIONS, EVEN IF THE SYSTEM IS IMPLEMENTED IN JUNE, EXCEPT THAT THE ITALIANS MAY BE MODERATE SELLERS FOR A WHILE.
6. THE BELGIAN MINISTRY FEELS THAT THE NEW SYSTEM COULD HELP DEMONETIZE GOLD BY (A) HAVING FECOM PRUDENTLY SELL OFF ITS GOLD ACQUISITIONS ON OPEN MARKET, (B) ENCOURAGING OIL-PRODUCING COUNTRIES TO BUY GOLD ONCE A DEEPER MARKET HAD BEEN CREATED AND/OR, (C) IMF MIGHT START EXCHANGING GOLD FOR SDR'S (REF B).
7. COMMENT: BELGIANS SEEM RELAXED ON THIS ISSUE FEELING THAT THEY ARE UNLIKELY TO BE EITHER BUYERS OR SELLERS OF GOLD IN THE SHORT OR MEDIUM TERM. THE GOB FEELS, HOWEVER, THAT THE ITALIANS HAVE A REAL CASE FOR SOME WAY BEING FOUND FOR ITALY TO UTILIZE ITS GOLD HOLDINGS. FURTHERMORE, SINCE THE FRENCH ARE IN A SIMILAR POSITION (I.E. HOLDING A RELATIVELY LARGE PART OF THEIR RESERVES IN GOLD), THE GOB HOPES THAT BY GIVING THE FRENCH A WAY TO MAKE THIS GOLD USEABLE IN INTERNATIONAL SETTLEMENTS, THIS WILL HELP BRING FRANCE BACK INTO THE EEC SNAKE. STRAUSZ-HUPE
Source: https://www.wikileaks.org/plusd/cables/1974BRUSSE02610_b.html
Summary: Timeline overview
2. ACCORDING TO BELGIAN TEXT, THE PROPOSAL AGREED UPON AT ZEIST WOULD ALLOW THE MEMBER CENTRAL BANKS TO BUY OR SELL GOLD FREELY AT "MARKET RELATED" PRICES. A MOVABLE BAND (E.G. A SNAKE) WOULD BE ESTABLISHED WITHIN WHICH CENTRAL BANKERS COULD NEGOTIATE SALES/PURCHASES BETWEEN THEMSELVES OR IN THE MARKET. ALTERNATIVELY, CENTRAL BANKS MIGHT BE ALLOWED TO SELL GOLD TO EUROPEAN MONETARY COOPERATION FUND (FECOM) FOR EUROPEAN UNITS OF ACCOUNT WHICH THE BANKS COULD THEN USE TO BUY EEC CURRENCIES FROM OTHER CENTRAL BANKS.
3. BELGIAN TEXT ALSO NOTES THAT "CERTAIN COUNTRIES" BELIEVE THAT NO OVERALL INCREASE IN GOLD STOCKS HELD BY MEMBER CENTRAL BANKS SHOULD BE PERMITTED IN THE SHORT OR MEDIUM TERM.
4. AFTER CONSULTATIONS IN WASHINGTON BETWEEN THE USG AND DUISENBERG/ZIJLSTRA NEXT WEEK, THE MEETING AGREED THAT THE G-20 DEPUTIES SHOULD BE BRIEFED IN PARIS MAY 7-9, THE EEC COUNCIL OF MINISTERS SHOULD BE BRIEFED ON MAY 20 AND THE MINISTERIAL G-20 SHOULD FURTHER DISCUSS THE MATTER IN WASHINGTON DURING JUNE.
5. IN COMMENTING TO EMBOFF ON THE TEXT, OUR SOURCE REMARKED THAT THE GOB ENVISIONS A QUITE WIDE BAND (SNAKE) WITH CENTRAL BANKS MEETING TO SET REVISIONS APPROXIMATELY ONCE A MONTH. HE ALSO FELT THAT THERE WILL NOT BE MANY TRANSACTIONS, EVEN IF THE SYSTEM IS IMPLEMENTED IN JUNE, EXCEPT THAT THE ITALIANS MAY BE MODERATE SELLERS FOR A WHILE.
6. THE BELGIAN MINISTRY FEELS THAT THE NEW SYSTEM COULD HELP DEMONETIZE GOLD BY (A) HAVING FECOM PRUDENTLY SELL OFF ITS GOLD ACQUISITIONS ON OPEN MARKET, (B) ENCOURAGING OIL-PRODUCING COUNTRIES TO BUY GOLD ONCE A DEEPER MARKET HAD BEEN CREATED AND/OR, (C) IMF MIGHT START EXCHANGING GOLD FOR SDR'S (REF B).
7. COMMENT: BELGIANS SEEM RELAXED ON THIS ISSUE FEELING THAT THEY ARE UNLIKELY TO BE EITHER BUYERS OR SELLERS OF GOLD IN THE SHORT OR MEDIUM TERM. THE GOB FEELS, HOWEVER, THAT THE ITALIANS HAVE A REAL CASE FOR SOME WAY BEING FOUND FOR ITALY TO UTILIZE ITS GOLD HOLDINGS. FURTHERMORE, SINCE THE FRENCH ARE IN A SIMILAR POSITION (I.E. HOLDING A RELATIVELY LARGE PART OF THEIR RESERVES IN GOLD), THE GOB HOPES THAT BY GIVING THE FRENCH A WAY TO MAKE THIS GOLD USEABLE IN INTERNATIONAL SETTLEMENTS, THIS WILL HELP BRING FRANCE BACK INTO THE EEC SNAKE. STRAUSZ-HUPE
Source: https://www.wikileaks.org/plusd/cables/1974BRUSSE02610_b.html
Summary: Timeline overview
Monetary gold wikileaks - 1974THEHA02042_b
1. DUTCH TREASURER GENERAL OMRT HAS GIVEN US RUNDOWN ON CON-
CLUSIONS REACHED AT ZEIST MEETING APRIL 22-23.
2. ACCORDING TO OORT (WHO WAS PRESENT) "INFORMAL CONSENSUS" EMERGED AMONG 9 THAT MEMBER CENTRAL BANKS SHOULD BE FREE TO BUY AND SELL GOLD AMONG THEMSELVES AT "MARKET RELATED" PRICE TO BE ARRIVED AT BY NEGOTIATION IN EACH CASE. IT WAS AGREED TO PROPOSE NO RPT NO CHANGE IN OFFICIAL GOLD PRICE.
3. IT WAS ALSO TENTATIVELY AGREED THAT CENTRAL BANKS COULD BUY OR SELL GOLD ON OPEN MARKET PROVIDED THERE IS NO NET ACQUISITION BY ANY ONE CENTRAL BANK OVER COURSE OF YEAR, I.E. NO NEW MONETI- ZATION OF GOLD. LATTER PROVISO WAS INSERTED AT INSISTENCE OF BRITISH AND DUTCH.
4. BEFORE IMPLEMENTATION OF THESE DECISIONS DUTCH MINFIN DUISENBERG AND CENTRAL BANK GOVERNOR ZIJLSTRA WILL VISIT WASHINGTON FOR CONSULTATIONS, ON BEHALF OF NINE, WITH TREASURY AND FRB. DUISENBERG TOLD PRESS AFTER MEETING THAT WHILE THERE CAN BE NO NEW EEC POLICY ON GOLD PRICING UNTIL USG REACTIONS ARE KNOWN, HE BELEIVES THAT "ECONOMIC LOGIC AND POLITICAL REALITY" WILL BRING US TO CONCUR. IF US REACTION IS FAVORABLE, PROPOSAL WILL BE SUB- MITTED TO EC COUNCIL FOR APPROVAL AFTER WHICH IT WILL GOT TO G-20. OTHER NATIONS WOULD BE FREE TO ADHERE TO EC SYSTEM IF AND WHEN IMPLEMENTED.
5. OORT SAID EC MINISTERS RECOGNIZE THAT LEGALITY OF PROPOSAL UNDER IMF RULES IS OPEN TO QUESTION. THEY ARGUE, HOWEVER, THAT RULES WERE BASED ON GOLD PARITY SYSTEM WHICH NO LONGER PREVAILS. EC HAS OPEN MIND AS TO WHETHER RULES SHOULD BE CHANGED OR SIMPLY IGNORED.
6. OORT UNDERSTANDS THA DUISENBERG HAS BEEN ON PHONE TO UNDER SECRETARY SIMON ABOUT TIMING OF WASHINGTON VISIT BUT HE WAS UNAWARE OF WHAT HAD BEEN DECIDED AS OF THIS MORNING. WE HAVE OFFERED OUR ASSISTANCE IF NEEDED. GOULD
Source: https://www.wikileaks.org/plusd/cables/1974THEHA02042_b.html
Summary: Timeline overview
2. ACCORDING TO OORT (WHO WAS PRESENT) "INFORMAL CONSENSUS" EMERGED AMONG 9 THAT MEMBER CENTRAL BANKS SHOULD BE FREE TO BUY AND SELL GOLD AMONG THEMSELVES AT "MARKET RELATED" PRICE TO BE ARRIVED AT BY NEGOTIATION IN EACH CASE. IT WAS AGREED TO PROPOSE NO RPT NO CHANGE IN OFFICIAL GOLD PRICE.
3. IT WAS ALSO TENTATIVELY AGREED THAT CENTRAL BANKS COULD BUY OR SELL GOLD ON OPEN MARKET PROVIDED THERE IS NO NET ACQUISITION BY ANY ONE CENTRAL BANK OVER COURSE OF YEAR, I.E. NO NEW MONETI- ZATION OF GOLD. LATTER PROVISO WAS INSERTED AT INSISTENCE OF BRITISH AND DUTCH.
4. BEFORE IMPLEMENTATION OF THESE DECISIONS DUTCH MINFIN DUISENBERG AND CENTRAL BANK GOVERNOR ZIJLSTRA WILL VISIT WASHINGTON FOR CONSULTATIONS, ON BEHALF OF NINE, WITH TREASURY AND FRB. DUISENBERG TOLD PRESS AFTER MEETING THAT WHILE THERE CAN BE NO NEW EEC POLICY ON GOLD PRICING UNTIL USG REACTIONS ARE KNOWN, HE BELEIVES THAT "ECONOMIC LOGIC AND POLITICAL REALITY" WILL BRING US TO CONCUR. IF US REACTION IS FAVORABLE, PROPOSAL WILL BE SUB- MITTED TO EC COUNCIL FOR APPROVAL AFTER WHICH IT WILL GOT TO G-20. OTHER NATIONS WOULD BE FREE TO ADHERE TO EC SYSTEM IF AND WHEN IMPLEMENTED.
5. OORT SAID EC MINISTERS RECOGNIZE THAT LEGALITY OF PROPOSAL UNDER IMF RULES IS OPEN TO QUESTION. THEY ARGUE, HOWEVER, THAT RULES WERE BASED ON GOLD PARITY SYSTEM WHICH NO LONGER PREVAILS. EC HAS OPEN MIND AS TO WHETHER RULES SHOULD BE CHANGED OR SIMPLY IGNORED.
6. OORT UNDERSTANDS THA DUISENBERG HAS BEEN ON PHONE TO UNDER SECRETARY SIMON ABOUT TIMING OF WASHINGTON VISIT BUT HE WAS UNAWARE OF WHAT HAD BEEN DECIDED AS OF THIS MORNING. WE HAVE OFFERED OUR ASSISTANCE IF NEEDED. GOULD
Source: https://www.wikileaks.org/plusd/cables/1974THEHA02042_b.html
Summary: Timeline overview
Wednesday, April 10, 2013
Monetary gold wikileaks - 1973STATE157536_b
ARAB LEAGUE CALLS MEETING TO DISCUSS ARAB RESERVES
1. TEXT OF U.S. PAPER ON SUBJECT CIRCULATED TO C-20 DEPUTIES JULY 17, 1973 IS REPRODUCED BELOW. YOU SHOULD AS- SURE YOURSELF THAT APPROPRIATE OFFICIALS OF HOST GOVERNMENTS HAVE FULL AND CORRECT TEXT OF U.S. PAPER, AND, IF APPRO- PRIATE AS SUGGESTED IN REF A., POINT OUT THAT THE PAPER MAKES CLEAR IN ITS FIRST NUMBERED PARAGRAPH THAT NOTHING IN THE U.S. POSITION PRECLUDES OR IS INTENDED TO PRECLUDE INVESTMENTS IN ARAB WORLD OR ANYWHERE ELSE.
2. YOU WILL NOTE THAT THERE REMAIN SOME IMPORTANT POINTS REQUIRING MORE PRECISE DEFINITION, ESPECIALLY IN PARAGRAPH 3 NUMBERED OF C-20 DOCUMENT. THESE POINTS WILL BE DISCUSSED IN APPROPRIATE TECHNICAL FORUMS. WE DONOT CONSIDER IT ADVISABLE TO ATTEMPT FURTHER INTERPRETATIVES THROUGH DIPLO- MATIC CHANNELS AT THIS TIME.
3. FYI. ONLY MAJOR OBJECTIVE OF INVESTMENT FUNDS IS NOT TO PRECLUDE "SPECULATIVE ACTIVITY", AS IMPLIED REF TEL A. TO GIVE ARAB STATES THIS IMPRESSION MIGHT BE MIS-INTERPRETED AS CONTRADICTING FREE MOBILITY OFFERED IN NUMBERED PARA- GRAPHS 1 AND 2 OF C-20 DOCUMENT. END FYI
4. TEXT FOLLOWS, "INVESTMENT IN OWNERSHIP OF ASSETS IN ONE COUNTRY BY PRIVATE NATIONALS OF ANOTHER HAS AT TIMES GIVEN RISE TO ECONOMIC OR POLITICAL PROBLEMS THAT HAVE REQUIRED RESOLUTION. HITHERTO, SUCH FOREIGN OWNERSHIP HAS NOT BEEN DIRECTLY BY GOVERNMENTS ON A LARGE SCALE, EXCEPT IN THE FORM OF ASSETS HELD AS MONETARY RESERVES. IN FUTURE, HOW- EVER, THE GOVERNMENT OWNERSHIP OF LARGE FOREIGN INVESTMENTS ON THE PART OF A FEW OIL-PRODUCING COUNTRIES IS LIKELY TO BE DESIRABLE, AND MAY WELL SURPASS IN SIZE ANY COMPARABLE SITUATION IN THE PAST. THE DEGREE OF STABILITY OF SUCH HOLDINGS OF FOREIGN ASSETS COULD THEORETICALLY PLAY A POSITIVE OR NEGATIVE ROLE IN THE EFFECTIVENESS OF ANY INTER- NATIONAL MONETARY SYSTEM, AND THEREFORE HAS BEEN MENTIONED AS A MATTER OF CONCERN, WHETHER OR NOT SUCH HOLDINGS ARE TECHNICALLY CONSIDERED AS PART OF THE "RESERVES" OF THE INVESTING COUNTRY OR WERE OUTSIDE SUCH "RESERVES." IN JUDGING THE DESIGN OF ANY NEW INTERNATIONAL MONETARY SYSTEM, THE QUESTION WILL BE ASKED AS TO THE MEANS, IF ANY, PROVIDED FOR HANDLING THIS SITUATION. IN APPROACHING THIS QUESTION, WE HAVE FELT IT ESSENTIAL THAT THE INTERESTS OF THE INVEST- ING COUNTRIES THEMSELVES IN FREEDOM FOR THEIR INVESTMENT POLICIES BE FULLY RECOGNIZED.
IN THE FRAMEWORK OF THE U.S. PROPOSALS FOR THE ADJUSTMENT PROCESS, MOVEMENTS IN TOTAL RESERVES OF A COUNTRY WOULD ASSUME A PREDOMINANT ROLE AS AN "OBJECTIVE INDICATOR," OF THE NEED TO TAKE ADJUSTMENT ACTION AND RESERVES WOULD IN GENERAL NEED TO BE BROADLY DEFINED FOR THIS PURPOSE TO IN- CLUDE A WIDE RANGE OF FOREIGN ASSETS HELD BY NATIONAL GOVERNMENTAL AUTHORITIES. HOWEVER, IT IS ALSO FULLY RECOG- NIZED THAT IN CERTAIN UNUSUAL CIRCUMSTANCES IN A LIMITED NUMBER OF COUNTRIES, IT MAY BE BOTH UNNECESSARY AND UNDE- SIRABLE TO RETAIN SO BROAD A DEFINITION OF RESERVES, OR FOR THE SYSTEM TO REQUIRE BALANCE OF PAYMENTS "ADJUSTMENT" ACTION WHEN "RESERVES" REMAIN ABOVE CERTAIN PREDETERMINED POINTS. THIS WOULD BE PARTICULARLY THE CASE IN THE CIRCUM- STANCES OF CERTAIN OIL-EXPORTING COUNTRIES WHICH EXHIBIT A PERSISTENT STRUCTURAL TENDENCY TO ACQUIRE FOREIGN ASSETS ESSENTIALLY IN EXCHANGE FOR ASSETS "FROM THE GROUND." AS SECRETARY SHULTZ OBSERVED IN AN ADDRESS DELIVERED IN PARIS JUNE 6, 1973:
- - CERTAINLY, AS WE POINTED OUT IN PRESENTING OUR MONETARY PLANS, THE ACCUMULATION OF LARGE CURRENT SURPLUSES BY ARABIAN PENINSULAR STATES SHOULD NOT CALL FOR EXCHANGE RATE ADJUSTMENT ACTIONS ON THEIR PART.
WHILE MANY OF THEIR EXTERNAL INVESTMENTS MIGHT LOOSELY BE CONSIDERED RESERVES, CERTAINLY THEY ARE NOT COMPARABLE TO THE KIND OF MONETARY RESERVES THAT WOULD SUGGEST A NEED FOR MONETARY ADJUSTMENT ACTION ON THEIR PART. INSOFAR AS FOREIGN EARNINGS ARE SPENT FOR IMPORTS OF GOODS AND SERVICES NECESSARY TO SECURE DOMESTIC DEVELOP- MENT AND DIVERSIFICATION OF A COUNTRY'S ECONOMIC RESOURCES, SO THAT THE COUNTRY'S INTERNATIONAL RESERVES DO NOT POINT TO ADJUSTMENT ACTION, THE PROPOSED SYSTEM WOULD BE SATIS-FIED. INDEED, PROMOTION OF DOMESTIC ECONOMIC DEVELOPMENT IS CLEARLY A HIGHLY SATISFACTORY MEANS OF UTILIZING POTENTIAL SURPLUSES FROM THE INTERNATIONAL AS WELL AS DOMESTIC POINT OF VIEW. THIS WOULD, OF COURSE, BE THE CASE WITHOUT REGARD TO WHETHER THE SOURCE OF THE POTENTIAL SUR- PLUS WERE TO ARISE FROM OIL PRODUCTION OR OTHERWISE. ECONOMIC ASSISTANCE TO OTHER COUNTRIES, INCLUDING TO COUN- TRIES IN THE SAME GEOGRAPHIC REGION, WOULD ALSO OBVIOUSLY BE A SATISFACTORY WAY OF AVOIDING OR DISPOSING OF POTENTIAL SURPLUSES. IN THESE INSTANCES, THE SYSTEM PROPOSED BY THE UNITED STATES WOULD APPLY EQUALLY TO ALL COUNTRIES AND THE GREAT MAJORITY OF ALL COUNTRIES WHEN TENDING TOWARD SUR- PLUS (INCLUDING OIL-PRODUCING COUNTRIES WITH LARGE POPU- LATIONS AND LARGE FINANCIAL REQUIREMENTS FOR DEVELOPMENT) WOULD BE COVERED BY WHAT HAS BEEN SAID ABOVE.
THE ONLY PRACTICAL PROBLEM IN TERMS OF THE PROPOSED SYSTEM, ARISES WITH RESPECT TO A VERY FEW OIL-PRODUCING COUNTRIES WHERE THE POTENTIAL FOREIGN RECEIPTS COULD BE SUBSTANTIALLY LARGER THAN COULD PRACTICALLY AND PRODUC- TIVELY BE SPENT FOR DOMESTIC DEVELOPMENT IN THE NEAR FUTURE. IT WOULD NOT BE IN THE GENERAL INTERNATIONAL INTEREST, OR IN THE INTEREST OF THOSE OIL-PRODUCING COUNTRIES, OR IN THE INTEREST OF THOSE POTENTIALLY RECEIVING INVESTMENT, FOR THE OPERATION OF THE INTERNATIONAL MONETARY SYSTEM TO GIVE SUCH COUNTRIES ANY DISINCENTIVE TO THE PRODUCTION AND EXPORT OF OIL, OR FOR THEM TO UNDERTAKE ADJUSTMENT MEASURES (INCLUDING EXCHANGE RATE CHANGES) OUT OF KEEPING WITH THE DEVELOPMENT OF NON-OIL SECTORS OF THE ECONOMY. CLEARLY, APPROPRIATE AND MUTUALLY DESIRABLE ADJUSTMENT IN THESE IN- STANCES CAN BE ACHIEVED BY CAPITAL EXPORTS, SO THAT POTEN- TIAL SURPLUSES OF SUCH OIL-PRODUCING COUNTRIES ARE AVOIDED BY FINDING INVESTMENT OUTLETS ABROAD ADVANTAGEOUS TO THE PRODUCERS THEMSELVES. THE ONLY COMPLICATING ELEMENT, IN TERMS OF THE U.S. PROPOSAL, IS THAT THESE CAPITAL EXPORTS MAY HAVE AN UNUSUAL CHARACTERISTIC, IN THAT THEY ARE OWNED AND MANAGED FOR THE MOST PART BY PUBLIC BODIES; FOR THAT REASON THEY MAY FALL WITHIN THE RELATIVELY WIDE DEFINITION OF "RESERVES" SUITABLE IN THE GENERAL OPERATION OF THE SYSTEM AS APPLIED TO ALL OTHER COUNTRIES.
OUR THINKING IS THAT THIS PROBLEM CAN BE RESOLVED IN A CONSTRUCTIVE AND MUTUALLY BENEFICIAL WAY BY PROVIDING IN THESE CIRCUMSTANCES FOR OFFICIAL INTERNATIONAL RECOGNITION THAT A PORTION OF THE FOREIGN ASSETS HELD BY SUCH A COUN- TRY COULD APPROPRIATELY BE CONSIDERED NOT AS MONETARY RE- SERVE BUT RATHER AS A NATIONAL "INVESTMENT FUNDS" THIS FUND WOULD, AT THE DISCRETION OF THE PRODUCING COUNTRY, SIMPLY BE AN AGGREGATE ACCOUNTING OR DESIGNATION OF CERTAIN NATIONAL INVESTMENTS WHICH IT WANTS TO REMOVE FROM ITS "RESERVES," AND WHICH BY THE SAME TOKEN WOULD FALL OUTSIDE THE SYSTEM BY WHICH PRESUMPTION OF A NEED TO TAKE OTHER ADJUSTMENT ACTION WOULD ARISE. TO USE SECRETARY SHULTZ' WORDS AGAIN, IN HANDLING THESE INVESTMENT FUNDS THERE WOULD EXIST "ALL THE INGREDIENTS OF A HIGHLY ADVANTAGEOUS MUTUAL BARGAIN." THOSE OIL-EXPORTING COUNTRIES FOR WHICH IT WOULD BE DESIRABLE FROM EVERY VIEWPOINT TO INVEST SUBSTANTIAL FUNDS ABROAD WOULD WANT SECURITY AND A REASONABLE RETURN ON THEIR INVESTMENTS. MANY POTENTIAL RECIPIENTS OF THE INVEST- MENT WOULD WELCOME IT IF THEY WERE SATISFIED IT WOULD BE REASONABLY STABLE AND BENEFICIAL
WITHOUT ATTEMPTING TO SPELL OUT ARRANGEMENTS THAT MIGHT BE MADE IN MORE DETAIL THAN IS NECESSARY AT THIS STAGE, A FEW POINTS OF BROAD PRINCIPLE CAN BE MENTIONED WHICH WOULD SEEM TO US SUFFICIENT FOR THE PURPOSES OF THE PROPOSED SYSTEM:
1. INVESTING COUNTRIES ESTABLISHING AN "INVESTMENT FUND" MUST CLEARLY BE GUARANTEED THAT NOTHING IN THEIR DECISION TO DESIGNATE SUCH A FUND DE- TRACTS FROM THEIR INHERENT RIGHT TO MANAGE THEIR PORTFOLIOS OF INVESTMENT ABROAD SO AS TO SEEK TO FULFILL THE INVESTMENT OBJECTIVES WHICH IN THEIR VIEW WILL BENEFIT THEIR ECONOMICS AND PEOPLES. TO PROTECT THIS RIGHT, WE DO NOT CON- TEMPLATE THAT THE IMF OR ANY OTHER OFFICIAL BODY WOULD HAVE ANY AUTHORITY TO MAKE PROPOSALS TO "INVESTMENT FUND" COUNTRIES WITH RESPECT TO THE AMOUNT, NATURE OR LOCATION OF THEIR INVESTMENTS.
2. COUNTRIES POTENTIALLY ON THE RECEIVING SIDE OF INVESTMENT FROM OIL-PRODUCING COUNTRIES, OR FROM ANY COUNTRY, NOW HAVE THE INHERENT RIGHT TO PER- MIT THOSE INVESTMENTS, TO ENCOURAGE THEM, TO LIMIT THEM, OR EVEN TO EXCLUDE THEM. THESE RIGHTS WOULD NOT BE BASICALLY ALTERED BY THE "INVESTMENT FUND" APPROACH. INDEED, MANY POTEN- TIAL INVESTMENT RECEIVING COUNTRIES WOULD BE LIKELY TO WELCOME THESE INVESTMENTS TO THE EX- TENT THEY FELT CONFIDENT THAT THEY WOULD BE LIKELY TO REMAIN OVER SUSTAINED PERIODS OF TIME, AND WOULD NOT BE SWITCHED SUDDENLY AMONG COUN- TRIES IN LARGE AMOUNTS WHICH COULD CONTRIBUTE TO DISRUPTIVE EXCHANGE MARKET CONDITIONS. AS A PRACTICAL MATTER, SINCE IN SOME CASES THE AMOUNTS OF "INVESTMENT FUND" INVESTMENT COULD REACH LARGE VOLUMES, THE INVESTING AND INVEST- MENT RECEIVING COUNTRIES MIGHT WISH IN SOME IN- STANCES TO ARRANGE SUCH BILATERAL CONTACTS, UNDERSTANDINGS OR AGREEMENTS AS THEY WOULD CON- SIDER MUTUALLY AGREEABLE, INCLUDING ASSURANCES THAT THE INVESTMENT RECEIVING COUNTRY WOULD NOT REDUCE THE AMOUNT OF "INVESTMENT FUND" INVEST- MENT ALREADY PLACED IN THAT COUNTRY WITHOUT FULL AGREEMENT OF THE AFFECTED "INVESTMENT FUND" COUNTRY.
3. THE INTERNATIONAL FINANCIAL COMMUNITY THROUGH THE IMF WOULD HAVE AN INTEREST ONLY IN SATISFING ITSELF THAT ARRANGEMENTS WITH RESPECT TO "INVEST- MENT FUNDS" ARE NOT INCONSISTENT WITH A SMOOTH AND EFFICIENT FUNCTIONING OF THE INTERNATIONAL MONETARY SYSTEM. TO AVOID ESTABLISHMENT OF "INVESTMENT FUNDS" BY COUNTRIES WHERE SUCH FUNDS WOULD BE INAPPROPRIATE, IMF APPROVAL MIGHT BE REQUIRED FOR THE ESTABLISHMENT OF ANY INDIVIDUAL COUNTRY'S "INVESTMENT FUND." SUCH SHOULD BE LIMITED TO THE CASES OF OIL-PRODUCING COUNTRIES WHOSE CIRCUMSTANCES EFFECTIVELY PRE- CLUDE ALL OF FOREIGN EARNINGS FROM BEING SOUNDLY SPENT FOR DOMESTIC DEVELOPMENT FOR THE FORESEEABLE FUTURE.
4. A STATISTICAL REPORTING SYSTEM COULD BE NEEDED TO ENABLE THE FUNCTIONS MENTIONED IN PARAGRAPHS 1., 2., AND 3., TO BE EXERCISED. "INVESTMENT FUND" COUNTRIES MIGHT BE REQUIRED TO PROVIDE TO THE IMF QUARTERLY STATISTICS COMPARABLE TO THOSE TO BE REQUIRED MONTHLY FOR ALL COUNTRIES IN RE- PORTING OFFICIAL FOREIGN EXCHANGE RESERVES IN THE NEW MONETARY SYSTEM. AT THE PRESENT STAGE, THE U.S. VIEW IS THAT SUCH REPORTS ON OFFICIAL FOREIGN EXCHANGE HOLDINGS WOULD NEED TO INCLUDE: (A) THE AGGREGATE AMOUNT, (B) THE DISTRIBUTION OF THIS AGGREGATE AMOUNT FOREIGN COUNTRIES, AND (C) THE DISTRIBUTION OF THE AGGREGATE AMOUNT IN TERMS OF ITS VALUATION BY CURRENCIES OR OTHER- WISE. THE INFORMATION WOULD BE MADE AVAILABLE TO ALL EXECUTIVE DIRECTORS, IF THE EXTENT OF GEOGRAPHIC AND CURRENCY DETAIL DOES NOT GO BE- YOND WHAT IS REQUIRED IN REPORTING IN A REFORMED SYSTEM WITH RESPECT TO FOREIGN EXCHANGE HOLDINGS IN THE "RESERVES" OF ALL MEMBERS. IN RESPECT TO THE DATA FROM STATISTICAL REPORTING REQUIREMENTS, THE FUND'S POWERS WOULD BE LIMITED TO THE USE OF THOSE STATISTICS MADE AVAILABLE TO ALL EXECUTIVE DIRECTORS IN THE CONTEXT OF REGULAR CONSULTATIONS PROVIDED FOR WITH ALL MEMBERS IN THE REFORMED SYSTEM.
5. IF IN SUBSEQUENT PERIODS BALANCE OF PAYMENTS DE- FICITS EMERGED FOR AN "INVESTMENT FUND" COUNTRY, FOR EITHER SHORT-TERM OR LONGER-TERM REASONS, THERE WOULD BE NO OBJECTION TO THEIR TRANSFERRING NEEDED AMOUNTS FROM THEIR "INVESTMENT FUND" TO THEIR REGULAR "RESERVES," SO THAT THESE FUNDS COULD BE USED TO FINANCE PAYMENTS DEFICITS.
THE PROVISIONS OF THE U.S. PROPOSALS CONCERNING CON- VERTIBILITY WOULD NOT RAISE SPECIAL PROBLEMS OR NEED TO BE ALTERED IN RELATION TO OIL-PRODUCING COUNTRIES.
THE IDEAS IN THIS PAPER ARE INTENDED TO FACILITATE THE INITIATION AND MANAGEMENT OF "INVESTMENT FUNDS" IN A MANNER THAT WILL MEET THE REASONABLE INTERESTS AND NEEDS OF ALL PARTIES CONCERNED. AT BOTTOM, SUCH COOPERATIVE AND BALANCED ARRANGEMENTS MUST MEET THE LEGITIMATE INTERESTS OF ALL CON- CERNED TO BE PRACTICAL AND SUCCESSFUL. END QUOTE ROGERS
Source: https://www.wikileaks.org/plusd/cables/1973STATE157536_b.html
Summary: Timeline overview
1. TEXT OF U.S. PAPER ON SUBJECT CIRCULATED TO C-20 DEPUTIES JULY 17, 1973 IS REPRODUCED BELOW. YOU SHOULD AS- SURE YOURSELF THAT APPROPRIATE OFFICIALS OF HOST GOVERNMENTS HAVE FULL AND CORRECT TEXT OF U.S. PAPER, AND, IF APPRO- PRIATE AS SUGGESTED IN REF A., POINT OUT THAT THE PAPER MAKES CLEAR IN ITS FIRST NUMBERED PARAGRAPH THAT NOTHING IN THE U.S. POSITION PRECLUDES OR IS INTENDED TO PRECLUDE INVESTMENTS IN ARAB WORLD OR ANYWHERE ELSE.
2. YOU WILL NOTE THAT THERE REMAIN SOME IMPORTANT POINTS REQUIRING MORE PRECISE DEFINITION, ESPECIALLY IN PARAGRAPH 3 NUMBERED OF C-20 DOCUMENT. THESE POINTS WILL BE DISCUSSED IN APPROPRIATE TECHNICAL FORUMS. WE DONOT CONSIDER IT ADVISABLE TO ATTEMPT FURTHER INTERPRETATIVES THROUGH DIPLO- MATIC CHANNELS AT THIS TIME.
3. FYI. ONLY MAJOR OBJECTIVE OF INVESTMENT FUNDS IS NOT TO PRECLUDE "SPECULATIVE ACTIVITY", AS IMPLIED REF TEL A. TO GIVE ARAB STATES THIS IMPRESSION MIGHT BE MIS-INTERPRETED AS CONTRADICTING FREE MOBILITY OFFERED IN NUMBERED PARA- GRAPHS 1 AND 2 OF C-20 DOCUMENT. END FYI
4. TEXT FOLLOWS, "INVESTMENT IN OWNERSHIP OF ASSETS IN ONE COUNTRY BY PRIVATE NATIONALS OF ANOTHER HAS AT TIMES GIVEN RISE TO ECONOMIC OR POLITICAL PROBLEMS THAT HAVE REQUIRED RESOLUTION. HITHERTO, SUCH FOREIGN OWNERSHIP HAS NOT BEEN DIRECTLY BY GOVERNMENTS ON A LARGE SCALE, EXCEPT IN THE FORM OF ASSETS HELD AS MONETARY RESERVES. IN FUTURE, HOW- EVER, THE GOVERNMENT OWNERSHIP OF LARGE FOREIGN INVESTMENTS ON THE PART OF A FEW OIL-PRODUCING COUNTRIES IS LIKELY TO BE DESIRABLE, AND MAY WELL SURPASS IN SIZE ANY COMPARABLE SITUATION IN THE PAST. THE DEGREE OF STABILITY OF SUCH HOLDINGS OF FOREIGN ASSETS COULD THEORETICALLY PLAY A POSITIVE OR NEGATIVE ROLE IN THE EFFECTIVENESS OF ANY INTER- NATIONAL MONETARY SYSTEM, AND THEREFORE HAS BEEN MENTIONED AS A MATTER OF CONCERN, WHETHER OR NOT SUCH HOLDINGS ARE TECHNICALLY CONSIDERED AS PART OF THE "RESERVES" OF THE INVESTING COUNTRY OR WERE OUTSIDE SUCH "RESERVES." IN JUDGING THE DESIGN OF ANY NEW INTERNATIONAL MONETARY SYSTEM, THE QUESTION WILL BE ASKED AS TO THE MEANS, IF ANY, PROVIDED FOR HANDLING THIS SITUATION. IN APPROACHING THIS QUESTION, WE HAVE FELT IT ESSENTIAL THAT THE INTERESTS OF THE INVEST- ING COUNTRIES THEMSELVES IN FREEDOM FOR THEIR INVESTMENT POLICIES BE FULLY RECOGNIZED.
IN THE FRAMEWORK OF THE U.S. PROPOSALS FOR THE ADJUSTMENT PROCESS, MOVEMENTS IN TOTAL RESERVES OF A COUNTRY WOULD ASSUME A PREDOMINANT ROLE AS AN "OBJECTIVE INDICATOR," OF THE NEED TO TAKE ADJUSTMENT ACTION AND RESERVES WOULD IN GENERAL NEED TO BE BROADLY DEFINED FOR THIS PURPOSE TO IN- CLUDE A WIDE RANGE OF FOREIGN ASSETS HELD BY NATIONAL GOVERNMENTAL AUTHORITIES. HOWEVER, IT IS ALSO FULLY RECOG- NIZED THAT IN CERTAIN UNUSUAL CIRCUMSTANCES IN A LIMITED NUMBER OF COUNTRIES, IT MAY BE BOTH UNNECESSARY AND UNDE- SIRABLE TO RETAIN SO BROAD A DEFINITION OF RESERVES, OR FOR THE SYSTEM TO REQUIRE BALANCE OF PAYMENTS "ADJUSTMENT" ACTION WHEN "RESERVES" REMAIN ABOVE CERTAIN PREDETERMINED POINTS. THIS WOULD BE PARTICULARLY THE CASE IN THE CIRCUM- STANCES OF CERTAIN OIL-EXPORTING COUNTRIES WHICH EXHIBIT A PERSISTENT STRUCTURAL TENDENCY TO ACQUIRE FOREIGN ASSETS ESSENTIALLY IN EXCHANGE FOR ASSETS "FROM THE GROUND." AS SECRETARY SHULTZ OBSERVED IN AN ADDRESS DELIVERED IN PARIS JUNE 6, 1973:
- - CERTAINLY, AS WE POINTED OUT IN PRESENTING OUR MONETARY PLANS, THE ACCUMULATION OF LARGE CURRENT SURPLUSES BY ARABIAN PENINSULAR STATES SHOULD NOT CALL FOR EXCHANGE RATE ADJUSTMENT ACTIONS ON THEIR PART.
WHILE MANY OF THEIR EXTERNAL INVESTMENTS MIGHT LOOSELY BE CONSIDERED RESERVES, CERTAINLY THEY ARE NOT COMPARABLE TO THE KIND OF MONETARY RESERVES THAT WOULD SUGGEST A NEED FOR MONETARY ADJUSTMENT ACTION ON THEIR PART. INSOFAR AS FOREIGN EARNINGS ARE SPENT FOR IMPORTS OF GOODS AND SERVICES NECESSARY TO SECURE DOMESTIC DEVELOP- MENT AND DIVERSIFICATION OF A COUNTRY'S ECONOMIC RESOURCES, SO THAT THE COUNTRY'S INTERNATIONAL RESERVES DO NOT POINT TO ADJUSTMENT ACTION, THE PROPOSED SYSTEM WOULD BE SATIS-FIED. INDEED, PROMOTION OF DOMESTIC ECONOMIC DEVELOPMENT IS CLEARLY A HIGHLY SATISFACTORY MEANS OF UTILIZING POTENTIAL SURPLUSES FROM THE INTERNATIONAL AS WELL AS DOMESTIC POINT OF VIEW. THIS WOULD, OF COURSE, BE THE CASE WITHOUT REGARD TO WHETHER THE SOURCE OF THE POTENTIAL SUR- PLUS WERE TO ARISE FROM OIL PRODUCTION OR OTHERWISE. ECONOMIC ASSISTANCE TO OTHER COUNTRIES, INCLUDING TO COUN- TRIES IN THE SAME GEOGRAPHIC REGION, WOULD ALSO OBVIOUSLY BE A SATISFACTORY WAY OF AVOIDING OR DISPOSING OF POTENTIAL SURPLUSES. IN THESE INSTANCES, THE SYSTEM PROPOSED BY THE UNITED STATES WOULD APPLY EQUALLY TO ALL COUNTRIES AND THE GREAT MAJORITY OF ALL COUNTRIES WHEN TENDING TOWARD SUR- PLUS (INCLUDING OIL-PRODUCING COUNTRIES WITH LARGE POPU- LATIONS AND LARGE FINANCIAL REQUIREMENTS FOR DEVELOPMENT) WOULD BE COVERED BY WHAT HAS BEEN SAID ABOVE.
THE ONLY PRACTICAL PROBLEM IN TERMS OF THE PROPOSED SYSTEM, ARISES WITH RESPECT TO A VERY FEW OIL-PRODUCING COUNTRIES WHERE THE POTENTIAL FOREIGN RECEIPTS COULD BE SUBSTANTIALLY LARGER THAN COULD PRACTICALLY AND PRODUC- TIVELY BE SPENT FOR DOMESTIC DEVELOPMENT IN THE NEAR FUTURE. IT WOULD NOT BE IN THE GENERAL INTERNATIONAL INTEREST, OR IN THE INTEREST OF THOSE OIL-PRODUCING COUNTRIES, OR IN THE INTEREST OF THOSE POTENTIALLY RECEIVING INVESTMENT, FOR THE OPERATION OF THE INTERNATIONAL MONETARY SYSTEM TO GIVE SUCH COUNTRIES ANY DISINCENTIVE TO THE PRODUCTION AND EXPORT OF OIL, OR FOR THEM TO UNDERTAKE ADJUSTMENT MEASURES (INCLUDING EXCHANGE RATE CHANGES) OUT OF KEEPING WITH THE DEVELOPMENT OF NON-OIL SECTORS OF THE ECONOMY. CLEARLY, APPROPRIATE AND MUTUALLY DESIRABLE ADJUSTMENT IN THESE IN- STANCES CAN BE ACHIEVED BY CAPITAL EXPORTS, SO THAT POTEN- TIAL SURPLUSES OF SUCH OIL-PRODUCING COUNTRIES ARE AVOIDED BY FINDING INVESTMENT OUTLETS ABROAD ADVANTAGEOUS TO THE PRODUCERS THEMSELVES. THE ONLY COMPLICATING ELEMENT, IN TERMS OF THE U.S. PROPOSAL, IS THAT THESE CAPITAL EXPORTS MAY HAVE AN UNUSUAL CHARACTERISTIC, IN THAT THEY ARE OWNED AND MANAGED FOR THE MOST PART BY PUBLIC BODIES; FOR THAT REASON THEY MAY FALL WITHIN THE RELATIVELY WIDE DEFINITION OF "RESERVES" SUITABLE IN THE GENERAL OPERATION OF THE SYSTEM AS APPLIED TO ALL OTHER COUNTRIES.
OUR THINKING IS THAT THIS PROBLEM CAN BE RESOLVED IN A CONSTRUCTIVE AND MUTUALLY BENEFICIAL WAY BY PROVIDING IN THESE CIRCUMSTANCES FOR OFFICIAL INTERNATIONAL RECOGNITION THAT A PORTION OF THE FOREIGN ASSETS HELD BY SUCH A COUN- TRY COULD APPROPRIATELY BE CONSIDERED NOT AS MONETARY RE- SERVE BUT RATHER AS A NATIONAL "INVESTMENT FUNDS" THIS FUND WOULD, AT THE DISCRETION OF THE PRODUCING COUNTRY, SIMPLY BE AN AGGREGATE ACCOUNTING OR DESIGNATION OF CERTAIN NATIONAL INVESTMENTS WHICH IT WANTS TO REMOVE FROM ITS "RESERVES," AND WHICH BY THE SAME TOKEN WOULD FALL OUTSIDE THE SYSTEM BY WHICH PRESUMPTION OF A NEED TO TAKE OTHER ADJUSTMENT ACTION WOULD ARISE. TO USE SECRETARY SHULTZ' WORDS AGAIN, IN HANDLING THESE INVESTMENT FUNDS THERE WOULD EXIST "ALL THE INGREDIENTS OF A HIGHLY ADVANTAGEOUS MUTUAL BARGAIN." THOSE OIL-EXPORTING COUNTRIES FOR WHICH IT WOULD BE DESIRABLE FROM EVERY VIEWPOINT TO INVEST SUBSTANTIAL FUNDS ABROAD WOULD WANT SECURITY AND A REASONABLE RETURN ON THEIR INVESTMENTS. MANY POTENTIAL RECIPIENTS OF THE INVEST- MENT WOULD WELCOME IT IF THEY WERE SATISFIED IT WOULD BE REASONABLY STABLE AND BENEFICIAL
WITHOUT ATTEMPTING TO SPELL OUT ARRANGEMENTS THAT MIGHT BE MADE IN MORE DETAIL THAN IS NECESSARY AT THIS STAGE, A FEW POINTS OF BROAD PRINCIPLE CAN BE MENTIONED WHICH WOULD SEEM TO US SUFFICIENT FOR THE PURPOSES OF THE PROPOSED SYSTEM:
1. INVESTING COUNTRIES ESTABLISHING AN "INVESTMENT FUND" MUST CLEARLY BE GUARANTEED THAT NOTHING IN THEIR DECISION TO DESIGNATE SUCH A FUND DE- TRACTS FROM THEIR INHERENT RIGHT TO MANAGE THEIR PORTFOLIOS OF INVESTMENT ABROAD SO AS TO SEEK TO FULFILL THE INVESTMENT OBJECTIVES WHICH IN THEIR VIEW WILL BENEFIT THEIR ECONOMICS AND PEOPLES. TO PROTECT THIS RIGHT, WE DO NOT CON- TEMPLATE THAT THE IMF OR ANY OTHER OFFICIAL BODY WOULD HAVE ANY AUTHORITY TO MAKE PROPOSALS TO "INVESTMENT FUND" COUNTRIES WITH RESPECT TO THE AMOUNT, NATURE OR LOCATION OF THEIR INVESTMENTS.
2. COUNTRIES POTENTIALLY ON THE RECEIVING SIDE OF INVESTMENT FROM OIL-PRODUCING COUNTRIES, OR FROM ANY COUNTRY, NOW HAVE THE INHERENT RIGHT TO PER- MIT THOSE INVESTMENTS, TO ENCOURAGE THEM, TO LIMIT THEM, OR EVEN TO EXCLUDE THEM. THESE RIGHTS WOULD NOT BE BASICALLY ALTERED BY THE "INVESTMENT FUND" APPROACH. INDEED, MANY POTEN- TIAL INVESTMENT RECEIVING COUNTRIES WOULD BE LIKELY TO WELCOME THESE INVESTMENTS TO THE EX- TENT THEY FELT CONFIDENT THAT THEY WOULD BE LIKELY TO REMAIN OVER SUSTAINED PERIODS OF TIME, AND WOULD NOT BE SWITCHED SUDDENLY AMONG COUN- TRIES IN LARGE AMOUNTS WHICH COULD CONTRIBUTE TO DISRUPTIVE EXCHANGE MARKET CONDITIONS. AS A PRACTICAL MATTER, SINCE IN SOME CASES THE AMOUNTS OF "INVESTMENT FUND" INVESTMENT COULD REACH LARGE VOLUMES, THE INVESTING AND INVEST- MENT RECEIVING COUNTRIES MIGHT WISH IN SOME IN- STANCES TO ARRANGE SUCH BILATERAL CONTACTS, UNDERSTANDINGS OR AGREEMENTS AS THEY WOULD CON- SIDER MUTUALLY AGREEABLE, INCLUDING ASSURANCES THAT THE INVESTMENT RECEIVING COUNTRY WOULD NOT REDUCE THE AMOUNT OF "INVESTMENT FUND" INVEST- MENT ALREADY PLACED IN THAT COUNTRY WITHOUT FULL AGREEMENT OF THE AFFECTED "INVESTMENT FUND" COUNTRY.
3. THE INTERNATIONAL FINANCIAL COMMUNITY THROUGH THE IMF WOULD HAVE AN INTEREST ONLY IN SATISFING ITSELF THAT ARRANGEMENTS WITH RESPECT TO "INVEST- MENT FUNDS" ARE NOT INCONSISTENT WITH A SMOOTH AND EFFICIENT FUNCTIONING OF THE INTERNATIONAL MONETARY SYSTEM. TO AVOID ESTABLISHMENT OF "INVESTMENT FUNDS" BY COUNTRIES WHERE SUCH FUNDS WOULD BE INAPPROPRIATE, IMF APPROVAL MIGHT BE REQUIRED FOR THE ESTABLISHMENT OF ANY INDIVIDUAL COUNTRY'S "INVESTMENT FUND." SUCH SHOULD BE LIMITED TO THE CASES OF OIL-PRODUCING COUNTRIES WHOSE CIRCUMSTANCES EFFECTIVELY PRE- CLUDE ALL OF FOREIGN EARNINGS FROM BEING SOUNDLY SPENT FOR DOMESTIC DEVELOPMENT FOR THE FORESEEABLE FUTURE.
4. A STATISTICAL REPORTING SYSTEM COULD BE NEEDED TO ENABLE THE FUNCTIONS MENTIONED IN PARAGRAPHS 1., 2., AND 3., TO BE EXERCISED. "INVESTMENT FUND" COUNTRIES MIGHT BE REQUIRED TO PROVIDE TO THE IMF QUARTERLY STATISTICS COMPARABLE TO THOSE TO BE REQUIRED MONTHLY FOR ALL COUNTRIES IN RE- PORTING OFFICIAL FOREIGN EXCHANGE RESERVES IN THE NEW MONETARY SYSTEM. AT THE PRESENT STAGE, THE U.S. VIEW IS THAT SUCH REPORTS ON OFFICIAL FOREIGN EXCHANGE HOLDINGS WOULD NEED TO INCLUDE: (A) THE AGGREGATE AMOUNT, (B) THE DISTRIBUTION OF THIS AGGREGATE AMOUNT FOREIGN COUNTRIES, AND (C) THE DISTRIBUTION OF THE AGGREGATE AMOUNT IN TERMS OF ITS VALUATION BY CURRENCIES OR OTHER- WISE. THE INFORMATION WOULD BE MADE AVAILABLE TO ALL EXECUTIVE DIRECTORS, IF THE EXTENT OF GEOGRAPHIC AND CURRENCY DETAIL DOES NOT GO BE- YOND WHAT IS REQUIRED IN REPORTING IN A REFORMED SYSTEM WITH RESPECT TO FOREIGN EXCHANGE HOLDINGS IN THE "RESERVES" OF ALL MEMBERS. IN RESPECT TO THE DATA FROM STATISTICAL REPORTING REQUIREMENTS, THE FUND'S POWERS WOULD BE LIMITED TO THE USE OF THOSE STATISTICS MADE AVAILABLE TO ALL EXECUTIVE DIRECTORS IN THE CONTEXT OF REGULAR CONSULTATIONS PROVIDED FOR WITH ALL MEMBERS IN THE REFORMED SYSTEM.
5. IF IN SUBSEQUENT PERIODS BALANCE OF PAYMENTS DE- FICITS EMERGED FOR AN "INVESTMENT FUND" COUNTRY, FOR EITHER SHORT-TERM OR LONGER-TERM REASONS, THERE WOULD BE NO OBJECTION TO THEIR TRANSFERRING NEEDED AMOUNTS FROM THEIR "INVESTMENT FUND" TO THEIR REGULAR "RESERVES," SO THAT THESE FUNDS COULD BE USED TO FINANCE PAYMENTS DEFICITS.
THE PROVISIONS OF THE U.S. PROPOSALS CONCERNING CON- VERTIBILITY WOULD NOT RAISE SPECIAL PROBLEMS OR NEED TO BE ALTERED IN RELATION TO OIL-PRODUCING COUNTRIES.
THE IDEAS IN THIS PAPER ARE INTENDED TO FACILITATE THE INITIATION AND MANAGEMENT OF "INVESTMENT FUNDS" IN A MANNER THAT WILL MEET THE REASONABLE INTERESTS AND NEEDS OF ALL PARTIES CONCERNED. AT BOTTOM, SUCH COOPERATIVE AND BALANCED ARRANGEMENTS MUST MEET THE LEGITIMATE INTERESTS OF ALL CON- CERNED TO BE PRACTICAL AND SUCCESSFUL. END QUOTE ROGERS
Source: https://www.wikileaks.org/plusd/cables/1973STATE157536_b.html
Summary: Timeline overview
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