New bid to tackle monetary system

Press, Volume CXI, Issue 32703, 4 September 1971, Page 17

New bid to tackle monetary system

(N.Z.P. A.-Reuter—Copyright) PARIS, September 3. Ten of the world’s richest trading nations were meeting in Paris today to try to thrash out some form of common approach on the troubled international monetary system after the upheaval caused by President Nixon’s tough economy moves last month. Officials from the finance ministries and central banks of the five main Common Market countries, and the United States, Britain, Japan, Canada, and Sweden will be trying to narrow their differences before a ministerial meeting of the “Group of Ten” nations in London in a fortnight’s time.

Any progress that can be made in Paris and in London in sorting out the tangled world monetary system would be vital for the annual meeting of the International Mon. etary Fund in Washington at the end of September. But monetary sources i were pessimistic about much progress emerging from the; Paris meeting, bearing in mind the differences in policy brought into the open) Since President Nixon’s j decision to cut the dollar’s] links with gold two weeks] ago. The sources pointed out i that while floating of the ] Japanese yen and other lead-’ ing currencies meant a par- ] tial success for Washington, the appreciation to date of; most of these currencies I

I was insufficient to satisfy ( the Nixon Administration. b The sources also recalled ■ the wide divergence between ’ the positions of France and I; West Germany towards the ! J United States dollar crisis. . France has struck out' ’ alone with a two-tiei i ■foreign exchange system, thus . maintaining its old I parity against the dollar while West Germany has i urged a collective floating j ! of Community currencies j against the dollar. These differences make it unlikely that the other i nations at the meeting will j be able to put a common set | of proposals to the United States, and all the countries i represented would therefore i probably continue to act i unilaterally for the time ! being, the sources believed. ! The sources felt that the United States delegation, led by the Treasury Under- ! Secretary (Mr Paul Volcker) and Federal Reserve Board governor, (Mr Dewey Daane) intended to outline the sort of currency revaluation Washington would like from its main trading partners. In any case, the Paris I

meeting, which could com tinue into Saturday, is not empowered to take decisions, but only to make suggestions to the governments represented.