Understanding the IMF...... (Resist the Goo Roo Poo Poo )

[Rayzur]

The International Monetary Fund (IMF) is perhaps one of the most misunderstood economic institutions operating on a worldwide scale. The IMF, as is often thought, is not a global central bank, it is not a development bank for Third World nations, nor does it dictate monetary policy to its members. Likewise, it is not to be confused with the World Bank. The IMF was founded as a result of the United Nations Monetary and Financial Conference held at Bretton Woods, New Hampshire, in July 1944. The conference was attended by 45 countries including the United States. The IMF was established to promote worldwide monetary cooperation, international trade, and most importantly, stability in foreign exchange. By December 1945 enough countries had ratified the charter to make it a viable institution. The IMF, which in 1998 had 182 member countries, is headquartered in Washington, D.C.

 

One of the first and most important acts of the newly formed IMF was to establish a method for standardizing the par value of each member nation's currency. It was felt by many economists, most notably John Maynard Keynes (1883-1946) of Great Britain and Harry Dexter White of the U.S. Department of the Treasury, that the Great Depression was exacerbated by currency inconvertibility. During the depression there was a tremendous demand for gold because of a lack of trust in paper currency. Those national treasuries that exchanged their currency for gold could not meet this demand and many countries, most notably the United Kingdom, were forced to abandon the gold standard against which they pegged the value of their currency. This made foreign exchange unstable because the value of these various currencies was no longer pegged to a fixed standard—the price of gold. Especially problematic was establishing a currency exchange rate between those countries still on the gold standard and those who had abandoned it. This situation led to nations hoarding gold or currency that could be converted to gold on demand, thus shrinking monetary exchange, foreign trade, and jobs dependent on foreign trade. As a result the world economy faltered with the worldwide prices of goods falling by 48 percent between 1929 and 1932 and the value of international trade falling 63 percent.

 

The ability to exchange currency is a central feature of world trade. The currency of each country has a value in terms of the currency of every other country. This exchange value is in a constant state of flux but in late 1946 the IMF standardized the par value of its members' currencies and developed various strategies for easing currency convertibility. Par values were standardized using gold. Since the United States also pegged the value of the dollar to gold at $35 per ounce, the value of other currencies for practical purposes became pegged to the dollar. Members of the IMF were required to value their currency within I percent of this par value and any deviation required IMF consent. This policy continued for nearly 25 years until the early 1970s when the Nixon administration ceased converting dollars for gold.

 

With the discontinuance of a par value system based on gold IMF members now use a variety of ways of valuing their currency. One way is to allow the currency to float freely with its value being determined on currency markets, a method favored by many industrial nations. In another method, a country may choose to manipulate currency markets in its favor by buying and selling its own currency. In a third alternative, a country may choose to peg the value of its currency to that of another currency. Regardless of the method used, IMF members may not peg the value of their currency to gold and the criteria used to establish the par value of their currencies must be divulged. In spite of national currencies going off the gold standard, the IMF is generally regarded as still being an important international regulatory agency that promotes an environment for orderly and stable currency exchange arrangements.

 

In addition to overseeing the international monetary system, the IMF also makes loans to its members during financial crises. In 1983 and 1984 the IMF lent $28 billion to member countries that were in arrears to other IMF members. In 1995 it lent Mexico $17 billion and Russia $6.2 billion. The money for these loans comes from quota subscriptions or membership fees that are based on the wealth of each nation. The wealthier the country, the higher the quota subscription. Quotas are reviewed every five years and can be raised or lowered depending on the economic health of the country. The United States, which is the IMF's wealthiest member, contributes about $38 billion while the Marshall Islands, the least wealthy, contributes about $3.6 million. There is also a specific correlation between the amount of money a member country can borrow and the amount of that country's quota subscription. In the event that the quota subscriptions cannot meet demand, the IMF has an established line of credit with governments and banks throughout the world. This line of credit is known as the General Arrangements to Borrow. The IMF can also borrow money from member governments for specific programs and uses. Oftentimes the IMF will borrow money for a member country at a more favorable rate than the country could do on its own. The IMF lends money only to member countries with foreign currency payment problems. A member country can withdraw 25 percent of its quota that was paid in gold or a readily converted currency. If this is not sufficient it is possible for the country under certain prescribed conditions to borrow three times its quota subscription over a period of time. In these cases, however, the IMF will insist on concurrent economic reforms to alleviate the underlying problems.

By 1998 the IMF held quotas worth $210 billion. This figure, however, is not a real figure in that 75 percent of each member's quota is paid in its own national currency. Since most of these currencies are not in demand outside of the issuing country, the real value of the IMF quota fund is somewhere around $105 billion. Those member countries that borrow from the IMF invariably ask for currency that can be readily converted, such as the dollar, yen, deutsche mark, pound sterling, or the French franc.

 

The IMF, despite the goodwill it has accumulated since its establishment, is not without its critics. Many such critics feel that the Asian crisis of the late 1990s was caused in part by IMF policies. The IMF (along with Western governments and banks) stood accused of encouraging Asian governments to loosen controls on foreign borrowing by their private domestic companies. This led to an escalation of foreign debt and when things got shaky a subsequent outflow of this Western money. The result was a devaluation of currencies and economies. Critics feel that IMF policies should promote domestic rather than foreign borrowing (even if it's more expensive) and hold foreign banks more responsible for "reckless lending." The IMF has also been criticized for "intruding" into the political process of Asian debtor nations and ignoring the "moral hazards" that accompany quick bailouts.

 

The governing authority of the IMF is the board of governors of which each member country contributes a governor and an alternate governor. The board of governors is responsible for the admission of new members, adjustment of quotas, and the election of executive directors. The board of executive directors oversees the managing director and the administrative staff. The interim committee of the board of governors was established in 1974 to analyze the international monetary system and make recommendations to the board of governors.

[ Michael Knes ]

FURTHER READING:

Culpepper, Roy, ed. Global Development Fifty Years after Bretton Woods: Essays in Honour of Gerald K. Helleiner. New York: St. Martin's Press, 1996.

Driscoll, David D. "What Is the International Monetary Fund?" Washington: International Monetary Fund, 1998. Available from www.imf.org .

Fischer, Stanley. "In Defense of the IMF: Specialized Tools for a Specialized Task." Foreign Affairs 77 (1998).

Levinson, Mark. "The IMF in Asia: Its Solution Is the Cause of the Crisis." Dissent 45 (1998).

[Rayzur]

Can't remember the post, but someone was asking for definition of terms etc.    I left the links in this post hot, so you could click on them and look up other stuff if you're interested. . Takes you to a great source of understanding many of the concepts that some of us are encountering for the first time.... The IMF link is also hot if you want to go to that site...

Hope its helpful to those with questions   

[SamDinar]

Thank you, now if pepple will take the time to read and consider what they have read !

[sandfly]

THANKS

[eastcreek]

 

The International Monetary Fund (IMF) is perhaps one of the most misunderstood economic institutions operating on a worldwide scale. The IMF, as is often thought, is not a global central bank, it is not a development bank for Third World nations, nor does it dictate monetary policy to its members. Likewise, it is not to be confused with the World Bank. The IMF was founded as a result of the United Nations Monetary and Financial Conference held at Bretton Woods, New Hampshire, in July 1944. The conference was attended by 45 countries including the United States. The IMF was established to promote worldwide monetary cooperation, international trade, and most importantly, stability in foreign exchange. By December 1945 enough countries had ratified the charter to make it a viable institution. The IMF, which in 1998 had 182 member countries, is headquartered in Washington, D.C.

 

One of the first and most important acts of the newly formed IMF was to establish a method for standardizing the par value of each member nation's currency. It was felt by many economists, most notably John Maynard Keynes (1883-1946) of Great Britain and Harry Dexter White of the U.S. Department of the Treasury, that the Great Depression was exacerbated by currency inconvertibility. During the depression there was a tremendous demand for gold because of a lack of trust in paper currency. Those national treasuries that exchanged their currency for gold could not meet this demand and many countries, most notably the United Kingdom, were forced to abandon the gold standard against which they pegged the value of their currency. This made foreign exchange unstable because the value of these various currencies was no longer pegged to a fixed standard—the price of gold. Especially problematic was establishing a currency exchange rate between those countries still on the gold standard and those who had abandoned it. This situation led to nations hoarding gold or currency that could be converted to gold on demand, thus shrinking monetary exchange, foreign trade, and jobs dependent on foreign trade. As a result the world economy faltered with the worldwide prices of goods falling by 48 percent between 1929 and 1932 and the value of international trade falling 63 percent.

 

The ability to exchange currency is a central feature of world trade. The currency of each country has a value in terms of the currency of every other country. This exchange value is in a constant state of flux but in late 1946 the IMF standardized the par value of its members' currencies and developed various strategies for easing currency convertibility. Par values were standardized using gold. Since the United States also pegged the value of the dollar to gold at $35 per ounce, the value of other currencies for practical purposes became pegged to the dollar. Members of the IMF were required to value their currency within I percent of this par value and any deviation required IMF consent. This policy continued for nearly 25 years until the early 1970s when the Nixon administration ceased converting dollars for gold.

 

With the discontinuance of a par value system based on gold IMF members now use a variety of ways of valuing their currency. One way is to allow the currency to float freely with its value being determined on currency markets, a method favored by many industrial nations. In another method, a country may choose to manipulate currency markets in its favor by buying and selling its own currency. In a third alternative, a country may choose to peg the value of its currency to that of another currency. Regardless of the method used, IMF members may not peg the value of their currency to gold and the criteria used to establish the par value of their currencies must be divulged. In spite of national currencies going off the gold standard, the IMF is generally regarded as still being an important international regulatory agency that promotes an environment for orderly and stable currency exchange arrangements.

 

In addition to overseeing the international monetary system, the IMF also makes loans to its members during financial crises. In 1983 and 1984 the IMF lent $28 billion to member countries that were in arrears to other IMF members. In 1995 it lent Mexico $17 billion and Russia $6.2 billion. The money for these loans comes from quota subscriptions or membership fees that are based on the wealth of each nation. The wealthier the country, the higher the quota subscription. Quotas are reviewed every five years and can be raised or lowered depending on the economic health of the country. The United States, which is the IMF's wealthiest member, contributes about $38 billion while the Marshall Islands, the least wealthy, contributes about $3.6 million. There is also a specific correlation between the amount of money a member country can borrow and the amount of that country's quota subscription. In the event that the quota subscriptions cannot meet demand, the IMF has an established line of credit with governments and banks throughout the world. This line of credit is known as the General Arrangements to Borrow. The IMF can also borrow money from member governments for specific programs and uses. Oftentimes the IMF will borrow money for a member country at a more favorable rate than the country could do on its own. The IMF lends money only to member countries with foreign currency payment problems. A member country can withdraw 25 percent of its quota that was paid in gold or a readily converted currency. If this is not sufficient it is possible for the country under certain prescribed conditions to borrow three times its quota subscription over a period of time. In these cases, however, the IMF will insist on concurrent economic reforms to alleviate the underlying problems.

By 1998 the IMF held quotas worth $210 billion. This figure, however, is not a real figure in that 75 percent of each member's quota is paid in its own national currency. Since most of these currencies are not in demand outside of the issuing country, the real value of the IMF quota fund is somewhere around $105 billion. Those member countries that borrow from the IMF invariably ask for currency that can be readily converted, such as the dollar, yen, deutsche mark, pound sterling, or the French franc.

 

The IMF, despite the goodwill it has accumulated since its establishment, is not without its critics. Many such critics feel that the Asian crisis of the late 1990s was caused in part by IMF policies. The IMF (along with Western governments and banks) stood accused of encouraging Asian governments to loosen controls on foreign borrowing by their private domestic companies. This led to an escalation of foreign debt and when things got shaky a subsequent outflow of this Western money. The result was a devaluation of currencies and economies. Critics feel that IMF policies should promote domestic rather than foreign borrowing (even if it's more expensive) and hold foreign banks more responsible for "reckless lending." The IMF has also been criticized for "intruding" into the political process of Asian debtor nations and ignoring the "moral hazards" that accompany quick bailouts.

 

The governing authority of the IMF is the board of governors of which each member country contributes a governor and an alternate governor. The board of governors is responsible for the admission of new members, adjustment of quotas, and the election of executive directors. The board of executive directors oversees the managing director and the administrative staff. The interim committee of the board of governors was established in 1974 to analyze the international monetary system and make recommendations to the board of governors.

[ Michael Knes ]

FURTHER READING:

Culpepper, Roy, ed. Global Development Fifty Years after Bretton Woods: Essays in Honour of Gerald K. Helleiner. New York: St. Martin's Press, 1996.

Driscoll, David D. "What Is the International Monetary Fund?" Washington: International Monetary Fund, 1998. Available from www.imf.org .

Fischer, Stanley. "In Defense of the IMF: Specialized Tools for a Specialized Task." Foreign Affairs 77 (1998).

Levinson, Mark. "The IMF in Asia: Its Solution Is the Cause of the Crisis." Dissent 45 (1998).

 

Thanks,rayzur. A very educational post, to say the least. Now, can you please give us a date & rate ?   

[stealthwarrior]

_{Thank you brother for giving us this knowledge,lord know americans can use more knowledge.i'm sorry to rant but to see the shear stupidity of my people makes me ill.}

[umbertino]

Quote

Likewise, it is not to be confused with the World Bank.

End Quote

 And to make matters worse they happen to be in the same DC street one in front of the other.

[sxsess]

Thanks Rayzur. Awesome post

[umbertino]

_{Thank you brother for giving us this knowledge,lord know americans can use more knowledge.i'm sorry to rant but to see the shear stupidity of my people makes me ill.}

Sister actually.

[cree8tive]

One of the more informative posts I've seen here recently. Thanks, Rayzur!

[Rayzur]

Thanks for the feedback guys!!

 

The IMF posted this in their official report of May 21 2013 Article IV Consultation with Iraq:

 

Directors supported the objective of the Central Bank of Iraq (CBI) to liberalize the foreign exchange market and the recent steps to simplify market regulations. Further measures are needed to liberalize fully the supply of foreign currency, with the objective of lowering the exchange rate spread, removing distortions, and complying with Article VIII of the Fund’s Articles of Agreement. Directors considered that strengthening the Anti Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, in line with the Middle East and North Africa Financial Action Task Force (MENA FATF) recommendations and FATF standards, would be more effective than restricting foreign exchange in curbing money laundering and terrorist financing.

Directors agreed that a stable exchange rate, supported by a high level of international reserves, provides a valuable anchor in an uncertain environment. They agreed that the two tier architecture of prudent management of CBI reserves and use of the Development Fund for Iraq (DFI) as a de facto oil stabilization fund is appropriate. They urged the authorities to continue to rely on the DFI to help stabilize government spending and ensure oil revenue transparency.

 

Not sure what liberalize means,..... in a business sense folks.... so am off to research that one.... Anyone understand the implications of this one?

[Rayzur]

What I have so far, from the IMF regarding the IMF use of the words liberalize the foreign exchange market, suggests (at this point) advocating that Iraq use a float versus managed exchange:

 

 

The IMF’s official de facto exchange rate regime classification shows that a majority
of the Fund’s member countries still maintain pegged exchange rate regimes (IMF, 2003). At
the same time, a growing number of countries have adopted more flexible regimes over the
past decade—most under market pressure (Box 1). Among the countries that voluntarily
shifted to flexible regimes, the transitions have often been gradual.
The trend toward exchange rate flexibility is likely to continue for a variety of
reasons. Rigid exchange rate regimes appear to be more crisis prone than flexible regimes.2
Some countries that do not implement sound macroeconomic policies will be forced to adopt
more flexible regimes. Others will increase exchange rate flexibility to minimize the risks
associated with economic and financial integration with the rest of the world. For example,
expanding trade linkages requires greater exchange rate flexibility in response to external
demand and terms of trade shocks.3 More recently, the upturn in capital flows to emerging
market economies has put substantial upward pressure on exchange rates and complicated the
conduct of monetary policy under pegs. Evidence also suggests that countries that have
liberalized capital flows either adopt more flexible exchange rate regimes or generally are
more susceptible to being forced off pegs (Eichengreen and others, 1999).
Moreover, as economies mature, the advantages of exchange rate flexibility appear to
increase (Rogoff and others, 2003). Developing countries—particularly those with less
exposure to short-term capital flows—may benefit from pegging their exchange rates to gain
credibility and discipline fiscal and monetary policies. However, relatively developed
emerging market economies with open capital accounts appear to gain from exchange rate
flexibility. Rogoff and others (2003) thus argue that emerging market countries can benefit
from investing in “learning to float,” partly to overcome their “fear of floating.
 

At least there is some support from the IMF to the notion about a float for Iraq, (and not just some goo roos idea or use of words).

 

 

Speaking of goo roo poo....

The IMF talks a lot about 2 tiers with regard to the exchange rate mechanics. They are NOT talking about two different rates of exchange for different groups of people. They are talking about a two tier approach to stabilizing their economy, and in that context, using the exchange rate and relying on the DFI to maintain this stability. If ya read IMF stuff really fast while watching TV and playing a board game, you might easily misunderstand what two tiers relative to the exchange rate actually means...

[Maggie123]

Excellent Research Rayzur. Thank You For Taking The Time To Post This Information For Us. Much Appreciated.

 

Funny How The Gurus Twist The Meanings Of Some Words, Huh.

 

JMHO... A Float Maybe Our Best Chance To See Any Profit From This... It Will Not Be A Sudden RV... A Thousand Times Larger...

 

But Hopefully It Will Be A Stable Way For Iraq To Increase The Value Of Their Currency. I Hope They Get Over Their "Fear Of Floating" Soon.

 

"However, relatively developed emerging market economies with open capital accounts appear to gain from exchange rate flexibility. Rogoff and others (2003) thus argue that emerging market countries can benefit from investing in “learning to float,” partly to overcome their “fear of floating".


 

[Rayzur]

Here is Article VIII IMF, Look at what is going on in Iraq relative to it...as.... it is what is being talked about now:

 

Section 1.  Introduction

In addition to the obligations assumed under other articles of this Agreement, each member undertakes the obligations set out in this Article.

Section 2.  Avoidance of restrictions on current payments

• (a) Subject to the provisions of Article VII, Section 3(b) and Article XIV, Section 2, no member shall, without the approval of the Fund, impose restrictions on the making of payments and transfers for current international transactions.
• (b) Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently with this Agreement shall be unenforceable in the territories of any member. In addition, members may, by mutual accord, cooperate in measures for the purpose of making the exchange control regulations of either member more effective, provided that such measures and regulations are consistent with this Agreement.

Section 3.  Avoidance of discriminatory currency practices

No member shall engage in, or permit any of its fiscal agencies referred to in Article V, Section 1 to engage in, any discriminatory currency arrangements or multiple currency practices, whether within or outside margins under Article IV or prescribed by or under Schedule C, except as authorized under this Agreement or approved by the Fund. If such arrangements and practices are engaged in at the date when this Agreement enters into force, the member concerned shall consult with the Fund as to their progressive removal unless they are maintained or imposed under Article XIV, Section 2, in which case the provisions of Section 3 of that Article shall apply.

Section 4.  Convertibility of foreign-held balances

• (a) Each member shall buy balances of its currency held by another member if the latter, in requesting the purchase, represents:
  • (i) that the balances to be bought have been recently acquired as a result of current transactions; or
  • (ii) that their conversion is needed for making payments for current transactions.

The buying member shall have the option to pay either in special drawing rights, subject to Article XIX, Section 4, or in the currency of the member making the request.

• (b) The obligation in (a) above shall not apply when:
  • (i) the convertibility of the balances has been restricted consistently with Section 2 of this Article or Article VI, Section 3;
  • (ii) the balances have accumulated as a result of transactions effected before the removal by a member of restrictions maintained or imposed under Article XIV, Section 2;
  • (iii) the balances have been acquired contrary to the exchange regulations of the member which is asked to buy them;
  • (iv) the currency of the member requesting the purchase has been declared scarce under Article VII, Section 3 (a); or
  • (v) the member requested to make the purchase is for any reason not entitled to buy currencies of other members from the Fund for its own currency.

Section 5.  Furnishing of information

• (a) The Fund may require members to furnish it with such information as it deems necessary for its activities, including, as the minimum necessary for the effective discharge of the Fund’s duties, national data on the following matters:
  • (i) official holdings at home and abroad of (1) gold, (2) foreign exchange;
  • (ii) holdings at home and abroad by banking and financial agencies, other than official agencies, of (1) gold, (2) foreign exchange;
  • (iii) production of gold;
  • (iv) gold exports and imports according to countries of destination and origin;
  • (v) total exports and imports of merchandise, in terms of local currency values, according to countries of destination and origin;
  • (vi) international balance of payments, including (1) trade in goods and services, (2) gold transactions, (3) known capital transactions, and (4) other items;
  • (vii) international investment position, i.e., investments within the territories of the member owned abroad and investments abroad owned by persons in its territories so far as it is possible to furnish this information;
  • (viii) national income;
  • (ix) price indices, i.e., indices of commodity prices in wholesale and retail markets and of export and import prices;
  • (x) buying and selling rates for foreign currencies;
  • (xi) exchange controls, i.e., a comprehensive statement of exchange controls in effect at the time of assuming membership in the Fund and details of subsequent changes as they occur; and
  • (xii) where official clearing arrangements exist, details of amounts awaiting clearance in respect of commercial and financial transactions, and of the length of time during which such arrears have been outstanding.
• (b) In requesting information the Fund shall take into consideration the varying ability of members to furnish the data requested. Members shall be under no obligation to furnish information in such detail that the affairs of individuals or corporations are disclosed. Members undertake, however, to furnish the desired information in as detailed and accurate a manner as is practicable and, so far as possible, to avoid mere estimates.
• (c) The Fund may arrange to obtain further information by agreement with members. It shall act as a centre for the collection and exchange of information on monetary and financial problems, thus facilitating the preparation of studies designed to assist members in developing policies which further the purposes of the Fund.

Section 6.  Consultation between members regarding existing international agreements

Where under this Agreement a member is authorized in the special or temporary circumstances specified in the Agreement to maintain or establish restrictions on exchange transactions, and there are other engagements between members entered into prior to this Agreement which conflict with the application of such restrictions, the parties to such engagements shall consult with one another with a view to making such mutually acceptable adjustments as may be necessary. The provisions of this Article shall be without prejudice to the operation of Article VII, Section 5.

Section 7. Obligation to collaborate regarding policies on reserve assets

Each member undertakes to collaborate with the Fund and with other members in order to ensure that the policies of the member with respect to reserve assets shall be consistent with the objectives of promoting better international surveillance of international liquidity and making the special drawing right the principal reserve asset in the international monetary system.

[BJinMontreal]

Thanks so much Rayzur, that's a lot to take in at one go ... but well worth knowing for future refernce.

[Rayzur]

My pleasure BJ and really really glad your hiatus was limited... so good to see you back and joining in with your bros and ya'lls wicked humor...... Uh huh, you know who ya'll are... uh huh.....

 

THE IMF and the Value of One's Currency:

 

Schedule C: Par Values

• 1. The Fund shall notify members that par values may be established for the purposes of this Agreement, in accordance with Article IV, Sections 1, 3, 4, and 5 and this Schedule, in terms of the special drawing right, or in terms of such other common denominator as is prescribed by the Fund. The common denominator shall not be gold or a currency.
• 2. A member that intends to establish a par value for its currency shall propose a par value to the Fund within a reasonable time after notice is given under 1 above.
• 3. Any member that does not intend to establish a par value for its currency under 1 above shall consult with the Fund and ensure that its exchange arrangements are consistent with the purposes of the Fund and are adequate to fulfill its obligations under Article IV, Section 1.
• 4. The Fund shall concur in or object to a proposed par value within a reasonable period after receipt of the proposal. A proposed par value shall not take effect for the purposes of this Agreement if the Fund objects to it, and the member shall be subject to 3 above. The Fund shall not object because of the domestic social or political policies of the member proposing the par value.
• 5. Each member that has a par value for its currency undertakes to apply appropriate measures consistent with this Agreement in order to ensure that the maximum and the minimum rates for spot exchange transactions taking place within its territories between its currency and the currencies of other members maintaining par values shall not differ from parity by more than four and one-half percent or by such other margin or margins as the Fund may adopt by an eighty-five percent majority of the total voting power.
• 6. A member shall not propose a change in the par value of its currency except to correct, or prevent the emergence of, a fundamental disequilibrium. A change may be made only on the proposal of the member and only after consultation with the Fund.
• 7. When a change is proposed, the Fund shall concur in or object to the proposed par value within a reasonable period after receipt of the proposal. The Fund shall concur if it is satisfied that the change is necessary to correct, or prevent the emergence of, a fundamental disequilibrium. The Fund shall not object because of the domestic social or political policies of the member proposing the change. A proposed change in par value shall not take effect for the purposes of this Agreement if the Fund objects to it. If a member changes the par value of its currency despite the objection of the Fund, the member shall be subject to Article XXVI, Section 2. Maintenance of an unrealistic par value by a member shall be discouraged by the Fund.
• 8. The par value of a member’s currency established under this Agreement shall cease to exist for the purposes of this Agreement if the member informs the Fund that it intends to terminate the par value. The Fund may object to the termination of a par value by a decision taken by an eighty-five percent majority of the total voting power. If a member terminates a par value for its currency despite the objection of the Fund, the member shall be subject to Article XXVI, Section 2. A par value established under this Agreement shall cease to exist for the purposes of this Agreement if the member terminates the par value despite the objection of the Fund, or if the Fund finds that the member does not maintain rates for a substantial volume of exchange transactions in accordance with 5 above, provided that the Fund may not make such finding unless it has consulted the member and given it sixty days notice of the Fund’s intention to consider whether to make a finding.
• 9. If the par value of the currency of a member has ceased to exist under 8 above, the member shall consult with the Fund and ensure that its exchange arrangements are consistent with the purposes of the Fund and are adequate to fulfill its obligations under Article IV, Section 1.
• 10. A member for whose currency the par value has ceased to exist under 8 above may, at any time, propose a new par value for its currency.
• 11. Notwithstanding 6 above, the Fund, by a seventy percent majority of the total voting power, may make uniform proportionate changes in all par values if the special drawing right is the common denominator and the changes will not affect the value of the special drawing right. The par value of a member’s currency shall, however, not be changed under this provision if, within seven days after the Fund’s action, the member informs the Fund that it does not wish the par value of its currency to be changed by such action.

[George Hayduke]

_{Thank you brother for giving us this knowledge,lord know americans can use more knowledge.i'm sorry to rant but to see the shear stupidity of my people makes me ill.}

Sadly, the inbreeding continues...