Economics: As Good as Gold

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The most important gathering of the world's moneymen is the annual meeting of the directors of the World Bank and the International Monetary Fund. Lately the U.S. has found it necessary at these meetings to promise to keep the dollar as good as gold.

Last week, as the governors of the 104-member nations of the Bank and Fund met in Washington, the U.S. found it easier to keep quiet and let others do the talking. "Personally, I don't see how any currency can be considered better than the dollar," said the Fund's managing director Pierre-Paul Schweitzer. "We see no unloading of the dollar in the private sectors, from private holdings, for conversion into gold. This alone is distinct proof of the soundness of the dollar."

Renewed Pressure. These kind words were one of the signs that, despite the cost of the war in Viet Nam and a balance of payments deficit, which the U.S. Treasury says is running at an annual rate of $1.3 billion, the dollar is surprisingly strong.

Still, there was renewed pressure on the U.S., especially from Europeans, to completely close its much debated payments gap as a precondition for meaningful progress toward world monetary reform. The so-called Group of Ten industrial nations has been creeping toward some sort of reform that would create a new reserve in case the $69.6 billion in gold, dollars and pounds sterling now available to settle international payments becomes insufficient to back growing world trade.

Classical Process. "We all agree that the deficits of reserve-currency countries should be eliminated in the shortest possible time," said France's Finance and Economics Minister Michel Debre. "Any device for the creation of additional reserves would, by definition, immediately provide countries currently in deficit with the means to postpone, against their own best interests, recourse to the classical process of adjustment." In other words, a new reserve would foil France's plan to make the U.S.—and others—settle accounts in gold.

No agreement was reached, or expected, on monetary reform, but at least there was some progress on how to go about it. The exclusive Group of Ten, with France dissenting, earlier this year voted to struggle ahead with some sort of monetary reform. Before Christmas, the Ten will meet with the 20 members of the executive board of the International Monetary Fund, which includes representatives of less developed countries, so that the poor as well as the rich can have a say in reform plans. Also there was agreement that some sort of stand-by reserve plan—no one knows quite what—should be drawn up and approved in 1967. France and its former colony Chad were the only ones to oppose the timetable. But finding himself isolated, Debre unenthusiastically agreed to continue to take part in the talks even if he does not agree with the reform ideas.