N.Z. urges drop in role of gold

Press, Volume CXII, Issue 33033, 28 September 1972, Page 1

N.Z. urges drop in role of gold

(N.Z.P.A. Staff Correspondent)

WASHINGTON, September 27. New Zealand yesterday expressed support for moves to demonitise gold and upgrade the role of special drawing rights in the world’s monetary structure.

The Minister of Finance (Mr Muldoon) told the annual meeting of the International Monetary Fund in Washington that gold should have a minimal role in the international monetary system until it was formally demonitised.

“New Zealand considers that the drawing rights should provide the main form of increased world liquidity.” he said.

The Minister suggested that the recently established Committee of Twenty, set up to negotiate the restructuring of the monetary system, should review clauses in the I.M.F.’s constitution which impose what he termed “gold obligations” on members receiving increases in their special drawing rights quotas. Mr Muldoon advocated the adoption of alternative arrangements, but did not explain what he had in mind. The Minister’s line on the diminution of the part played by gold in the monetary system is similar to that of the United States. But he made it clear in his speech that New Zealand was taking its stand in accord with its economic interests and not simply following the policy approach of the United States.

He noted suggestions that the managing director of the I.M.F. (Mr Pierre-Paul Schweitzer) should not continue in office and declared: “At this crucial time his experience and wisdom should be retained in the interests of us all.”

The American Administration has made it clear that it does not want Mr Schweitzer to win a third five-year term of office when his present term runs out in September next year. Mr Muldoon said it was essential, if recurring monetary crises were to be avoided, that the very large balance-of-payments surpluses and deficits which had been a feature of some economies in recent years should be prevented. “Both surplus and deficit countries should be more willing to make appropriate adjustments, either internally or to the par value of their currencies," he said. [Details of the United States plan for world monetary reform are reported on page 17.]