E.P.U. problems

Abstract

In the present article Dr. Guido Carli, chairman of the European Payments Union Managing Board, summarises the core of his observations on the union’s problems in the following conclusions: (a) within the present E.P.U. Agreement, a combination of credit and debit positions may arise which would exhaust the dollar assets and therefore terminate the working of the institution; (b) the situation could be redressed by decreasing quotas, by altering the dollar-credit ratio within the quotas, by contributing an additional supply of dollars. This fresh contribution is liable to come either from participating countries or from U.S.A.; but as all participating countries are running a dollar deficit a contribution of theirs would increase this deficit; (c) whatever device under (b) be accepted, it would be insufficient to restore normal working conditions in E.P.U. if participating countries did not pursue economic and monetary policies calculated to bring about equilibrium of their balances of payments.

JEL: F15, F33, F36