Money: Toward Paper Gold

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Veto Powers. With strong support from all European countries and withdrawal of earlier objections by the U.S., the delegates agreed to French demands for a change in the IMF constitution to give the Common Market veto rights over major IMF decisions, a power now held only by the U.S. On the more substantive matter of the SDRs, France found itself in an isolated position.

In the end, the French refused to sign the communique, complaining that the idea of SDRs had become distorted since its inception, making them not only a credit but also an asset. France objected to this because it might help the U.S. with its balance of payments trouble. The SDRs, said Debré, have become "an expedient." All this did not take the French out of the SDR system for good; they could move back in.

While it would be better to have the French in, the system can work with out them. After ratification of the SDRs, a separate IMF decision will still be required to put the scheme into effect and to decide how much paper gold to issue. The U.S. would like to see up to $10 billion worth added to the present $70 billion in world reserves over the first five years. Of that, the U.S. would get $2.46 billion, the six Common Market countries $1.8 billion, Britain $1.2 billion and undeveloped countries $2.8 billion. Welcome as the new assets will be, they will provide no ultimate solution to the U.S. payments deficit. And if the U.S. fails to reduce that deficit in the meantime, votes to activate the SDRs may prove hard to muster.