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'Send in the reserves' - a call for help in world debt straits

Is the world short of money? Economist John Williamson says ''yes,'' that industrial and developing nations together should have some 10 billion extra special drawing rights (SDRs) to add to their present $403 billion total of international monetary reserves - money that can be used to pay bills when needed.

Beryl W. Sprinkel, undersecretary for monetary affairs at the United States Treasury, says he has not seen ''any clear demonstration of the need for additional international liquidity. But we are trying to keep an open mind.''

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Mr. Williamson believes that a fresh allocation of SDRs by the International Monetary Fund would offer some help to the developing countries in dealing with their severe international debt problems. They could use a portion of the SDRs, an international currency worth at the moment about $1.01, to service some of their debts.

The Treasury's Mr. Sprinkel wonders whether more SDRs would stimulate world inflation.

This issue is more than academic. The IMF's Interim Committee will consider another SDR issue at a meeting Sept. 22. It is one of several international monetary issues central bankers and finance ministers are reviewing.

At the economic summit of the seven major industrial powers in June, the government leaders instructed their finance ministers ''to carry forward, in an urgent and thorough manner, their current work on ways to improve the operation of the international monetary system, including exchange rates, surveillance, the creation, control, and distribution of international liquidity, and the role of the IMF.'' (''Surveillance'' is what the IMF does when it examines domestic economic policies for their effect on international finance.)

The summit goal is to have a report on these topics by mid-1985. The deputies of the finance ministers (and central bankers, too, in some cases) met in Paris last week to continue their discussion of this assignment. Representing the United States was Mr. Sprinkel and Henry C. Wallich, a governor of the Federal Reserve System.

The question of more SDRs did not come up at that Paris meeting. But the developing countries have been pressing for a large issue of SDRs. The US, West Germany, and some other industrial nations have been holding back any action.

Williamson, who is with the Institute for International Economics in Washington, contends that because of a shortage in monetary reserves, a new allocation of special drawing rights by the IMF to its member nations would not be inflationary. The bulk of the extra ''money'' would be added to national reserves to serve as a ''buffer stock'' against balance-of-payments deficits. In a world of more or less floating exchange rates, the new SDRs would not be used as''high powered'' money, leading to the creation of even more money by domestic banking systems, he says.

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In a paper given in May to a conference sponsored by the Boston Federal Reserve branch to mark the 40th anniversary of the Bretton Woods conference that created the postwar international monetary system, Mr. Williamson also called for an ''SDR Clearinghouse'' to permit the transfer of SDRs between the official and private sectors. At the moment, SDRs can be used only by nations in settling accounts with one another.

Private bond issues are sometimes denominated in SDRs to avoid the problems of excessive currency fluctuations, as SDRs are valued according to a package of currencies. But interest or principal on these bond issues is paid in actual national currencies. A clearinghouse would make SDRs usable by nations to intervene in foreign-exchange markets, as they do now with dollars or other major currencies. Williamson said it would be ''an essential precondition for evolution of the SDR as an active working instrument of international finance.'

But as he admits, there seems to be no interest in such a ''reform'' on the part of the policymakers.

These officials, however, do seem more interested in strengthening ''surveillance.'' Mr. Wallich, in a telephone interview, held that there is a growing understanding that international considerations of domestic economic actions have to be taken seriously.

Within the academic community recently, a number of economists have been discussing the improvement of international coordination of economic policies.

But, Wallich says, it is difficult for governments to subordinate domestic policy to international issues.

The same problem applies to changes in the exchange-rate system. The current floating or flexible system permits a nation, especially a large one, much freedom to carry out domestic economic measures without suffering many international consequences. Unfortunately, exchange rates sometimes float ''too far'' in one direction - witness the current concern about the ''excessive'' strength of the US dollar.

As a result, there have been some suggestions that the world return to some proximity of a fixed-exchange-rate system, with its discipline for domestic economic policies. For instance, Robert V. Roosa, a partner in a New York investment banking firm of Brown Brothers Harriman & Co., advocates a ''target-zone approach'' for the key currencies of the US dollar, the West German market, and the Japanese yen.

Wallich, though, sees no clear alternative to floating for the major currencies. He doesn't expect a return to fixed exchange rates. ''If countries were willing to make great sacrifices for international stability, then you could do it,'' he said.

And, he reckons, domestic economic stability must come from within a nation; it won't be imposed by a fixed-foreign-exchange rate.

For the time being, it looks as if the world finance ministers may tinker a bit with the existing international monetary system. But no major changes seem likely.

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