UNITAS AND BANCOR

Evening Post, Volume CXXXVI, Issue 64, 13 September 1943, Page 6

UNITAS AND BANCOR

TO STABILISE CURRENCIES

Lord Keynes, the eminent British economist, adviser to the Treasury, and a director of the Bank of England, it has been announced, is to visit the United States. His mission no doubt will be connected with proposals for currency stabilisation, which is perhaps one of the most urgent and difficult of post-war problems. 4 The object sought to be achieved by the proposals above referred to, is "to re-establish the currencies of different countries on -a basis that will give confidence and encourage revival of trade," to quote the monthly review of the National City Bank of New York. Faith in money must be assured if business is to, be resumed and; a basis laid for the advance planning essential to full recovery of trade and,employment; if, in short, financial chaos after the war is to be averted. To that end, tentative proposals have been made- by the Treasuries of the United States and of Great Britain. These proposals or plans—and their provisional nature is strongly emphasised —are the work of high technical experts, but they have not been officially adopted by the American or British ' Governments. What both plans propose, the National City Bank explains, is "an international agency through which member countries would co-operate in determining and controlling exchange rates, and which would provide facilities for temporary support of- currencies experiencing pressure. Both plans recognise that currency stability is fundamentally a matter of maintaining equilibrium in payments between countries, and provide for procedures aimed at restpring such . equilibrium in cases where departure is leading to currency weakness." .

Both plans would create a new international monetary unit—"Unitas" under the American plan, and "Bancor" under the British plan. This currency would not circulate generally but would be used merely as a medium of account.on the books of the Stabilisation Fund or clearing union. The gold value of Unitas would be fixed per* manently, while that of Bancor could be changed by the governing board., Dollars, sterling, or any other leading currency would serve as well, except for the question of national prestige. Management of both plans would be vested in a governing board empowered to fix exchange rates, and member countries would pledge themselves not to alter their exchange rates except as approved by this board. Under the British plan member States would agree between themselves on the initial value of their own currencies in terms of bancor. Under both plans j the obligation is imposed on creditor as well as debtor countries to help maintain exchange equilibrium. The British plan states specifically: "The system looks on excessive credit balances, with as critical an eye as on excessive debit balances, each being, indeed, the inevitable concomitant of the other." Member countries are ex- ' pected to discourage excessive accumulation's of foreign exchange -. by their nationals and provision is made for furnishing information of such accumulations.