E.E.C. step nearer monetary reform

Press, Volume CXV, Issue 33933, 28 August 1975, Page 18

E.E.C. step nearer monetary reform

(N.Z.P.A.-Reuter—Copyright) VENICE. The European Common Market has taken a small, but significant, step towards clearing the ground for an early international agreement on the future role of gold and other issues of world monetary reform.

The Treasury Minister for Italy (Mr Emilio Colombo) who chaired the one-day meeting of E.E.C. finance ministers at Venice, told a press conference he hoped an agreement could now be reached with the United States and the other members of the International Monetary Fund at the I.M.F.’s annual meeting in Washington this week.

Delegation officials said that the significance of the progress made was in a softening of the French position, hitherto sharply opposed to that of the United States on certain key issues, which had blocked progress at previous IMF. reform negotiations. The Finance Minister for France (Mr Jean-Pierre Fourcade) told the meeting France no longer insisted that all elements of monetary reform must be agreed on at the same time and France was now ready to leave a settlement on the future of floating exchange rates until after the LM.F. session.

The other eight E.E.C. countries endorsed the French position. The three issues the E.E.C. wants to settle at the LM.F. annual assembly are the future of gold transactions by central banks, how to phase out the LM.F.’s present gold stock, and a new share-out of LM.F. members’ quotas to reflect the financial strength of oil-producing countries. In earlier negotiations, France argued that agreement on these three topics was conditional on reaching an understanding on the future of floating exchange

rates, which it wanted eliminated from an updated monetary system except in exceptional circumstances.

This was opposed by the United States which saw floating rates as an acceptable practice. The United States also took a hard line on gold, insisting that central banks could only buy and sell it in cases of extreme necessity.