What Was Abandoned Per The Jamaica Agreement Of 1976

By October 15, 2021Uncategorized

In the following, I suggest addressing in turn (1) the tensions that have developed within the Bretton Woods system and why it has been allowed to collapse; (2) the resulting reform efforts and the reasons for their failure; (3) the Jamaica Agreement and its importance; (4) Where and how should we go from here.* Finally, the desire for a political compromise has led the Bureau, in its first drafts of reform, to hide real differences under intelligent formulations. This prompted U.S. Representative Paul Volcker to complain that the documents were full of what he called empty sentences. (Example: In the reformed system, “the volume of global reserves should be adequate, but not excessive.”) Although many of these sentences were phased out or filled with meaning, some remained. Since then, two things have happened. First, ministers finally recognized that international monetary arrangements had indeed fundamentally changed and based their agreements on the real situation, not on what they had hoped for in the future. Second, they legalized the real situation by modifying the fund`s articles of association by adapting to it. And third, they agreed on a number of changes that will improve the functioning of the Fund in a significant way, but will most likely have only a very limited impact on the functioning of the monetary system itself. A fourth important element, although not formally adopted, is the clear desire to maintain the IMF Code of Conduct in International Monetary Relations, in particular the prevention of competitive exchange rate restrictions and devaluations and the maintenance of the Fund as a centre for international monetary cooperation and consultation. The three problems that afflicted the international monetary system at that time can be explained as follows. First, it was found that the process of maintaining or restoring the balance of international payments when it was disrupted – the adjustment process, as it is called in economic jargon – worked less and less effectively. This was largely due to a trend towards increased exchange rate rigidity under the Bretton Woods nominal value system, a rigidity that went far beyond what had been originally envisaged.

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