EiICN:14! ArlAlI2

Page 75 . . .

•

I t will .be aeencthat tn.eentries (expressed iri' $1000) on th~debit sideamount tq$l,172.5'and are muoh less than the entrieso'nthe

creC\~t

^{.si.de., Hondur-as} has, therefore, 'g'i'ven':c,reclits

io

^{the other}

i;hree countr:i.esto.th.e ex·tent·of $225 +·$6,lT8.5 =$6,343.5. The credi-,t .of2;25.•is .the a.utomaticcredi t lfhiclf"Honduras uncler the·ru.les of CACjI is o1Jliged to. e:f<t·end.

~ut

^the

$6~'n8.5

is the excess 6:t:edit .which Honduras. is not obliged to grant. It can demand it's payfuent

in the, form of. three bilateral.' .' : . " ba.Lances from the othe:i three

oe~tries

^. In actu;1), :fact this demandf~r paymentisinaCle 'once'every'\{eek.·' 'The

ceLcu.La ti.on oi' the weeklY settlement Ls -as fenows, the th1'e'e' b'iLat er-a I

balances. sri'!'

extent of the automatic credit

$225,OOO~' The simplest method .!:~,' ~;-i

19 3

.'·Ti~~se

bilaterAl balances ....ill, hm'evi'!r,- bedeoreased. t o . t h e : : whio4.HoJ1duras must extend, .i.e. ;;iby

of effe()t~g the r-aducti.onj, of

three-bilateral balances consists in apportioning the $225,000 in accsrdance.

, - : , ' , : . ' . , .'" ' , ..., ,";' " ,".'1.: ,;: "" _~.

with· the 'percentage d.istribution of the three bilateral balances,

which is 25;69 per cent, 74.24 per cent and .07 per cent

respe~tive:LY,

•

This gives' the following dedue'tions from the three bilateral balances.."

.

^.

respeetiVely, $57.8, :n67.0 and

$2~

The final result of this

. I, :

calculation is that 6uatem~la must make a payment of $1,898.0-57.8 268.91,572.2. El Salvador must rriake a payment of 5,388.9- 167.0 , 679.0 = 4,492.0;' Finallj,'N{caragua must make a payment of

5.0 -

^.2

-.5 = 4.3,,' The sUJ!!:.~totaJ9..f:."t4et!Jil:eepaYj]jeilts.amcurits to 6,118.5

_-.'.C'_

which is equivalent to the total credit en tzy of 1;'2'91.0 -minus the autqmatig Ci"",dit o.f225.0 and thepa.jments' by Honduras to the other . celttral banks'.

of

^{947 ·5·}

..i

The.' cle,~:;:~~1ii iB'?,'S'i.~,mme" ~f,~li!:\\h,s€!~ tl\lmE>!:J:t.!¥,,~xerlf;;;:i;x'l1lo.\1ths. in,

. \~Q ;:i.~:'··>-L;J...."·";;·'"'~"'" ""'P~~--"-' ,,- , ,- - .

order to re-establish the initial position of all mewber central banks 194.'

in the current_opera--f,ions f'un d ._{.. .}

~-"- , , ' , ' , '-'-.,. " ". " "

.

^"

15 D~p"mb,'i'f)'c,fI"e c.learing.b,ou'[l' elt'll:!pajoes th,e

cre(li~!i',cpmJ1Hs,from every m\,mber, to, jol1e ext~J;:Lt

.~).Itpmptic" I'ost,~i4,terim,

0:["t225,000. IfMl.e

•

extra.ct from th.e eACH operations aooountwith.)Iogliura,s whtoh was given

, -". ~; "

.

^,

-'.L

abp,yl3hag..,peer,t iLl eXisteLlceetthel'op.:J.5 ,jIune 0it' ,IS ,J)egembBr, . th""

semi"c"''t/fua.l,.settlements wo~lg. have. be§'lJ. e:teactly equiv"-+ept, to th"i bilaterEi-1J,alancesof Guatemala_" J,e Jj:;h;SaJya~g.ort iJ.pliHigarag;aa·jJfJth:,.,

-,'....,.~"-", ^.,''. " , , ' - "----,)

,,l;tppliW:~8",,~J;tHfeupon the item 2)?Y;l,tlJJk cl",Nt., side ,al)..<;ljohe i~(jl!!l, 1, 9P th";>""credU",,j)icj,e,.wpuld_ have been c€l+.ip:t;4'l,at",a.,an<:ttl1eQjl.,CF OPJ,ra:j;;Lpp.,s,

.'..,..- . "..." - ; ' , . " ' .'. , " ., , " ,'''." ' ".. -

-.. aR90lJlil t,·,with HOlJ.4uras,w\l\lld have, 09!l,taA"",<ii,on1y,th", fip]; i tel)1 OlllJ_cctJ:l<3,

"_ , ..,'.'-.~'• • -, _ ...,_ ',.. "" . ' . ,,'. .- "1- .,- -- - ,," _ . . , "

debit side, viz. the initial contribution deposited by Hon~wa!>,;i.n ^"J Hondurian currency o:l;;J??5,OgO.

(g) Extensibil'lt;t,of the automatic credit.

195.

,

lfuen it was iiUndtlfat "the_{.;~ ~.}

cr~dit

^{quota of $2~5~000",;:'; was quite}

inadequate, the fiv~ member banks agreed among themselves to define the exoess oredftas any credit>fu '.exc,iss of <$225,000

plus

$J:(JO,000~::~

this meaJ!'tt'th&tet'the te'tial' aut'ori!iticereClib fOi liH'j''i:vEl'''members

i#as

raised'f'r-orn 'H,125' ,000 to' $1,625;'000.

1915.' ''l'h~'autcmatic

^oredii

a';~jY~ble

tc any indi.;,'i'clual

~e~ber

^cent;';{

bank

couid"~lsobe

raised, if only a few of the other central banks weI'e defic'itmembers. In the e;treme"case, onl;' olie out cf the five

Centrar'Ba';ks could

b~

a deficit membe';'.'i";'tliis case the only deficit

,:~, ~ ,

member cculd obtain $325,000

ofor~diton

each of the

acc~untsof

^,the

Thus the total credit for the

~;"lydeficit

member couici''be;4:''x$325,000 = 1,306,ObO.

(h)

~;urtheJ;'.discussiolJ.of 1;1),$,.eACH opera ti.ons account wi tha _ -c'entia1 bank

197. lie. shall. return J~ tl"eCAC;a:, p]J,eJ,':ii~,ioDs ac'(",unt with .fr!lpdJ¥.a;?;Ito com-plete its analysis⁰ So far we explained debit hi"adi4gs. (i;i)j;.ob",mer,,,ly paYllleJJts by Honduras in Hondurian currency for imports from the -other member country. In fact, however,

theit~iJjsdepit'!le~,a:frig:tii)

^could,

ba,;any-::payment,.1lladehy .lIonduras ill HOllliUr'astn Hond1ll'iai..c\li:r<llrcil for

.,,'" " ' ; '

,

E/

^ON

.l.4/

^WF.' •

2/4 "

:Ei/

ON .l4!1\MA(i2 . Fage 77

'-, -, .:'::~:;(: :7'lrL...Il

-'anygooets, serVices orsEfcuritieswha:tever' received bylIcindfuoas~';For'---:-...

;i,~s~e.pc'r,-i~~5.it~~S Und~~<lebit"~ea,Qing (ii)~~uldbe 1?a,ymel1t~ !\l~~

^.-:'1)

for aecurLties, forei!>li-exchange, gold or-iir;t:isibl\)s imported!.

tl1l:ly'-.

,

could be :Payments. forth@ outward; Flf1j!lsfer of capita~, amortizati0!l' "

interest from Honduras to the other member countries.

198. Sj,wHar1y'./5tf\eiteljjs.,~,?l"cl,~d1;U1derhell-cling ( i) on . the: e:r;edi;b

side Cp\-\J,dbe ,an;rpayment in:5'i'thermember"fil curr sncy .;reoeived,bY . o j J ' ; . H0!1dJXP;i,a,r;t,~ f"r,al'lYrgo"ds~: serv~"es, secur,;i, tie'1' ,exp"J;'ted to. t\?-eQj:her,

m§Ili\;>e'!'fil:~Tl1eY,couldb,eli'!l:ywElntsJ;'ece;i,yed by Ronduras of securitie1l1

foreign~;P,lJ:a,nge,' g(')J.d,invisi1:>~e" exported.~heyOOU1.d 'Oe inward transfeJ;'s of capital, amortizationi interest-from th" q:tiler metiil;>er to Honduras.

".",

199. Jl..L'~ic~e,J1·oft;\lI'l"a,g;re,emBIf.te13tjl.b],;i.shing CACjJ: isver:;r_,spe~if;i,c

about other heaCLings,on both ,thecre<J,it,and.debi tside o:p.i;he.CA,ca::._{'.',' ... "}

_ _ .'.'^..' " ; . ' " ,,^',..^{, .} .. ,"'-

..

^{..." '"- ' ..' ..}

operation~:aco0'¥lt ,w;i,th..,each gen,ti!!:a]..;.b,ank.Th;i,o;; .. ind,uoesus ,t":'make ',.' a short e;xc1U.'si0!l.

in

to;,th~>fi'?:P:1:'"cfa«99W'tin,g th'?J!10resoas ,:;;t_.~s

very instrllct~ve,fO:J;'ith<1~~f:eade,rslfhq ;ore intere:;ft;ed in thep:t;a..G.tiipa:j.·

working of apay.ments union.,Wesh"U a,gain,_~ i~stance the CACH '"

. , ' ' .- . " . " . • \ ': ' . . . ' , - • . . >,.,',' , ' ,", ~ •

operation.s,a<?eolfIliA with Hondv.r,'J,s~ . Tl),e fu:rthe:r: ,headinge on thed~b~,i;

side and cre,di,-t .siqe, are.". '^{r . ' r:} ';'J;'. '.,".J:J.'

•

Debit operations

(iii)

Credi topera tid!is :.

Headjus-t;rg.ent

qt·

(lpr,tribut;i,on.s -receivaoI'e--oyHonduras in Rondu-'»ienoUrrtfuc~t;ifHond'ura.s morii#

depreciates (v)

l\llq^wanqe, fp:t'.:.expenaes. ,~,C1>d,... " L ; "

minist;';ition (tobe

eh;;.rg:ed .. "(' )

aged'nst'prof'{t's)" ^c'.' _:~V:., Receipts'in

$

by' Honduras"tb'

, cancel.

item.

·.1 on credi tside .

~.Ei:~e7~9~;9~~~~ '6;:~:;~ie,~,t ^'(v)

Th.is .restpres in,itial contri""i but ion debit

Paymen til mdp+Iar,s by Hondurae .to cancel itelll

(ii)

on debit side

inthEisemi-annu!l.lsetilemen^t of balances. ".

~-"

Debit ,operations Oredit Operations

..

9fi.n c ella tion, entry for ,p.,eR~:t? "

in

case of wi thdiawal

01:'

Hondu::' , ras from eACH

""--.e,cc·:: ',:')

J

, (vt)

(viiY'Other credit' operations

Readjus~mentofcontribution

paY1l.bl:e" by Honduras in 'local cUJ;':J:':en9lf • .- if <Honduras money deprecilltes

200. The'i:l.ebiiana. credit'i'teiU-s (;oncern,ing:i.t!terest· and exPenses of admmistra

tiori"ne~a'i\.o:eJtpl~fia.ti~ti~"The

^debi

t'he~dfug(v)~nd.cr~dit

headiniFfi.v) ate conderriedw:ttri eriii-:ies made at tj+e:

s~fuii¥!lnq.al- 6i~i.M "

settlemilfits designed

t(j~hbiv

the eiredt of the bila

tJr~f}6iear~g setti~::i'

ments. Debit headingCvydffsets' the (;redit heading

ti)

aiid"Clredit;"

heading n:vYoffsets th~ a'~Kit heading

(ii).

Ji '{":) , ,,', , "

201. Debit heading (vi) and credit heading

(v)

record adjustments of the infti£f"8-6ntti1lutioiF'l:iJ.

dii'§g'<5f/i

^J

6liaAg~in exchaXig~OrHe~~)Cft'

the Honduh:dn axchange

:Jate'a~ptebH~~;-'H6ndurasmust)a':;gmeiit:i:i~'

. '.', ' ' _ , . , . ' . ,.".",'1;' ".~ ^,', '·L":,'r{ r;:~"c;j,::-;:..\ "'" ,-j."_'~,,··,'~'-rgJ(!C},'"l> ';' ,:J...'-';·;'IG:.TC)

initialcontributiont6'Reep' its 'pur'cha13mgpower constant. This

, -' "l8 ,:"'''L''~'\ .",:i+ .. ;. ·,:·:t·,",;,·-,';', ~t(: ::'i';~)":':., ,; ':'f'fLL ,:'L-::-:·j:,:,·.·:~":,:,~}:,,,

.r. (

results in an entry und"er -debit heading (vi); I f Hondurian currency

deprdCik't'~$, Hon:duf.~sj1"iI:fTa:rt£~

out sbiri{e";;i'rts illi tia{)Jepbsi

ts;;

This

result6inaii'!idff~ettfug

under ci€d'i't

head~g:l'c'v).Fih;ilfY;

there

is'

;!dted.1t h'';':ad::ll1g! (vi). 'tjiliis

isfor~se,m 'f6'r

the

ca~'~!;"~ere;'

, +i:n:

Honduras withdraws from CACH. I t offsets the withdrawal

of the

ini tial contri15ution,.:"":,,,c_..,.:::.:

'(1 r~e§,sJr~si¢r

cOllJpl;ying wi-fu' exchange''r!estr ictfo'rid

, , ~,.:"". ", 1:5 .)...,'1;.-.: .:.1 -'",', '..!:.

202" Ar'(fble'29of CA-mienjofus all member_{, .} ;,;"1<:'.:' _,":::) {i.:·,.,. " : '':.1,,; '-,' '. .. "'"

cent;l:',~l:Oankst:d:.8,6:;:b~erate

\(,.(.1,'~-' ". .~~l,,;;~^{'_1,· '"}

with Il\em~:t:s,,-in[w!l:.ose" Lc;ountr'iesc, exchanger estric,t1ion'

s

are':m ,g:or-ce'in

",order, to comply, ',w;i;,'ith, them inithe sy:at;em of mul

tiliJ.'i;'~fiPl'''cf~iJ.~ilig.

^:El

" .' ", _~

Salvador had

sucjr~xbhange resjthctionsc~J.~flyto'p~~'v,~-ri'f ,lfig,l:J,t,

^{of ' ','}

\ '.-.", .L.;, '.. '.' I .-.,_J.I.'J ,' .. ''''" .'.

capitaf[~ri'd.

sp'edtiiiJ.tidn. Two

~ifJdt'i4e

measures were adoll:ie:d.s ;TM"

.'·,:,\'..'e.!.c ' '..I ..' . ...1

•

cen,tra.ile,:'Q;anks of,,{'h.<>temala and,Honduras agree,di, to. monthly quotas for pur-chaas of El Salvador 'hotEls' and coins.

<;"~~'e;,iequ~tas

were pupposed to peeqWI; to

t.~e

b(}na fidetransfrontS}e;

:tir~~;~;e:~),

to small scale , purchases acrosstlr" ,bor,d:erby.;;residents -of ·Salvador'. 'I'he notes aq4.

'Y 71" _W'T~ -WT)

I",

,:1C;'ti;r:;' .:

coins .ipq"estipl1 foundtp.e:i.r. way to the

ce~tral b~nks ofG:&at~;n~h"

and

Hond~as~hioh

present'ed them

iorrede~ption

^to

i;heC~entral1J~k~

of San Salvador. filly bigger amount of San Salvadorean

ourr~noy' o'i'rcu.lat-'~gib'Hoiid~as andduate~ala'

was d<'iclared

to

ber,efugee' money and.'wE.s

--:'.i~:';)r~'::", :'i,;, ;,',1" : ' , ' , ' "" .. , . \ ' : ' ~-C" ^,

not bought by the Hondurianand Guatem1l1an oen'tral banKl;U "',

" :;'. i'- , .',,~

.'.,.,.-, .',' . ':".': ':'·''-:·i--"'.:~:, ·'.',U,'L,,'L;("i ",l,'f'

20). The central bank of El Salvador guarantees in general the payment

L;;C)~':;";:":". ':>:":~";:':':'<:'-",';:';'r:: "'.'" :.<'.': .','" :': " ":", ',.'" . . . . ,. ^{i "}

or--<;n-eqlle"i'fprlWiou13IY-'a'pprovtiil:--b'y-it,&·'ex~ang:e-;;<:i£f':hc.e~--"'The6ther

"iJil;~g'Rl),

C),%l'ii;,:;i";!.'

b!ffik$Agferd,)l;p~

^toh!¥'

~~ranY'~'v:§;1~~~j~::.c~7&)-le

^s

'-iJWi\;J.eli[s,i\;jl~;y;- 4?!d,~<;),¥l'f1'uth,,,;r~~,,:.d,

9Y

th.eex.op.ange ,ogntrol ,au;thorities'

;"',: ", ". -rnz, ,',-';',',< r'tf.:!"i, ;)";"":', ',:,:::,:' ,:,':'-)'T),fl1;:,:)

"f!:fr~,S-,a_l,,-a,Ckori·tJ!otp,JllQfZ;r,,~ua s,B:dC'''~,t~ R,i~:F~.O':;l~ n~,t:}l.ave j,oin~~

g49H'\1,lll1,E!i'ls"tb,\', q1,E(ar.i,ng- i1,lll;i-.ol1 ,4,aeJ: ,a<j.g1?~e;q."effeGt.~ve measures for

; ' .. ' --" .. ' " . . . ',---" ",,' " ... "";'~ U'" _ " .0,,';:,".,c,.' ,-. ,,'•.' . . •-u- __:7

i,P.1il:le!!l·~t~"g"e,xoh"'J;1/:le,r,es2p?io,t.ion,s.", . """"'!.','J '.:'.",'.... " " . __ .,"

" '. ""(j f,lStab.'da:rd':biing"'barlk6hargeiH'n eioMrige marke:1;e.,,:The ::Gentral c' "c:'l.I':<~@ic?cni.•, O h \ l g t l . e , L ' , : j ! ' " ; " "

.L. .. .!...j

204. Bank oharges .

o;;:i~ej6;';;it;aiAmeri6an e:X!oliill;ge~';;rkg-i!:;fbJ! ilitej<~

n~t'i~n~i':~,i.~~~:f~~s', 't;

^e:';'

th~'

^ipte&d

bei~eenbi\Yfug'an<l.~ellfug

^riJ.'tes

for

C(~i',i;':~/~~r"th~i'c£~i or 6iikhier·che~tl.e~(

6e:r'tifl'eil' ao'Mpt'l,fr·

ohe~~e'~)'~);rbi~k" dh~q;~~'

^varY'

wia~i:/Hom'counttyto

cr&uhtr;r .,... "',

YLJ.,:::~:"",..,. ", _{~ :3~r}'JC"'-Xa'.. : ".:-::' _"~i J.'': ," __.1:',:,

';:U':',' ." "'~;'t'.E:." ,::!.

r,g0.5'·.4'r,mJ.11,tilff:j;erEl}.,,,greePJent was proposed .by the Board of Directors

o:t'"OACH~9~;g;~;r:c1961.~ni ~;'pro~e,d'

_",.J". __ .' ""--',.., '- , .."~~.,~.",,.,,_•. ' ,<:. ;., '. ',; ..'<' ~ ^{by the'}:;.

B~a~d ~ J~e i962,~~'f

.;, .: '., ,..i;:' :,>.;'-" '-"';' "',;'"

purohase.,no;!;es ,..00 'Cp;il'ls.Pf!llember ccun trLes at the deohred par value

·L.' '-... ",~~',. .c·,,, ..,,,-~,,.!... ,;,,·--:, i.',,','.'..' .."" :',' ;:<~: "',,;.' c'. ',,<;:',' ["(', . , : ..:" :l'I'r:~..t . , , " . , , ;

s",bjE}o)t.io .a ,.plO9.f'li",t,e"ba\l.1<:ing oQmll)issi,on of 1/2 p.er oen

t.

'Some member

' .. ",'" '." - - , " ' . ' " " . , , " ',.',' '1)',.' .. ... __':}.~ ';'. "'~.'

.,""J:.·.'Q.~tr"l, .ba.lCL\<s ...re..i\lrefl,dyElp±:,6roing. this rule •

c_· " ••

•

(", ':206.':'The·

'aboV'e;,agoeenlent' sugges.ted ,"l'so the.. pr.es,tiop ,.of. S, Cent):'a:l.. __

. f.'".

A:in:er'idM':'clieque. I t:'W6uld'bea bank ohequEleJi'}lressed. an ~he,.,,];.o,<;'ii-}"

ourreriuyc cf"the":'issuingcountry, subject,tc settlem\m.t at,.

par"

,.Th.", cheques wopld be sold tprough banks which would ot"rge a banking

.;:..:, - _ ._::'-: - _ ~~:.._ _'. __.~..":~_,_- . : . , \ '- _ _ ' - , e ' : ; " ,"',' t ' ,

oommission not exoeeding 1/4 per" oen-t--?r·$~. wh~_c:EieV:~·.:~~,less. The ,oEluj;r,a:l.,bs,l1lt".,b",longing to Gi\,CHwo1l1d oi:r:oulate among banks a register

• • , . ' ' ' < • •- '" . ' ' , " ' ' , , . . . . ) i" '·:.,'lJ.<X ~__:.":-.~ •

i>;' '.

,,:J;>f si.gP'ltpres' of,.bank pffioe;,:;:? author-i z ed 1;9 dr.aw the cheques in their

, ' , ' "-,, .".'-."", .,' ". . . " , ,,) .,;:'-:'''',,~r.: :~\:,::·..i ",'r.: .:-' ':"~')"":~":';~)"" ~:j.

respeoti;v:e bl;LUking S,Ystem.s. Eaoh bank dealing in the Central Amerioan

) ; c' f , ' . ' - . ! l •

cheque ccuLd. effeot immediate settlement without need for

a

"credit tc

Ej CN.• 14.. /~IP. 2/4 .. EjCN .14jAMA/l2

·Page-SO·

account" procedure. The cheque would

: ";:!'

number ing , series,' and stubs would,he

-rcentral bank.

have a common jl.esign , b_llt differen.t fcr .ea ch, member' .'

colour,

t.'

207. The five. member Central Banks we):\e a alced, to give th~ir approval

::;

to the creation of Ce:qtra;L American qb-equesand· the' proposals' concern-ing bankconcern-ing charges for measures, of in te:rJ:jational pa;y;men:ts.,

(k ) The proposal.. fOr. discount fund 'for miter-Central Ame:t'ican

industrial exports . ,,,,C':-'

208._{. ".'.} The_{_. '.}

CentraiAm~ri~~n

,_,.c ".", _ , :<; :",';^countries,~_'\. .

wh:i.ch':torm~~

(;~i' -.:. ^the,~":-')

6~ntraLAmerican

',:-"':,... ,- ...,,~

collilnon market found that the mere removal Of barriers to: trade

in'.manu-- . ^{' .}", ,--, • I

fa4tl!ires >Iithin ilieootiuiion 'market 'is only' one condi hon

j~ord,eveloping

this trade. Thecther 'conda tionis the

_availab~li

ty.of tra4ecreMt for manufaoturers provided either by the 'm~n~faqturer ~r the banking

sY~tem.

_{;'~. -'.'.\~...:~L~L...__}Im:Qc;r,t&,,f';rom~L.,;:=~·:' ':;"~"~~,::...":'" -.~.:

il.meri~Eh.;iI'lltoCent:J:'a1Anlli-rioan;(;ourltries

.,:-... ':,:...-...._ _... .. .".'~,- - .' ~-';'.:.:- ,:~' ~': :., ,.' ~:,:-_,_.L.-,:,•.c..-+ :.- ^{are still}

prelerred by 2mporters because they are sold~ohgenerouscredit termg which- Central American manufacturers cannot cffer •..

" .--,j."

209 _~

The Celltral American,,<fe!)tralbankfi;l:tave held pr eliminaryoon'"

au'Ltations about the best way: oLprc:viding intri\-centralArneric.an

. ",'> . ' . '

expor-t credit for domestic manuf'ac bur-e s , The, proposal emerged to . Create a discount fund for intra-central American e.xports.It real;Ly 'amounts to the cr eat.t on of disccunt banking. The f'und is suppo sedvso

be provided'by the five central banks. Bills of exchange and.other documents'a'tisingfrom trade

il1

manufactures pr-oduced within the -Oentral American common marlcet"would be discounted by the discount

fund. The manufacturers- would thus'recov~r the working capital absorbed

throueh

in~estment

^in.Central

,. ""

Internationalliguidity

::: '".-~

by:the goods sold the mcment the bi11s'of exchange are endorsed by the imJ2pr,tef' i\nd/ Or his bank. The disooi'm'ted doc';ments would be multi:"

lateralj,y . cleared by Cil.CH ina way' ana lcgous to post-dated cheques •_{.'.'.i ,. •}

,American seCUrities

~1;l

'210.' The five Cent:tal Anier-Lcan currencies e:x:hibit y;arYingdegrE>es of .:iri'¢bnvertfbility ; 'The fiv'e oe:D'tral banks are, of cOUrse,always most anJtious to increase

iliei~ in

t'erna t:ion. al mon.etary reserves_{. •} .In_{' i} orde:r:,.,to

Ie ' lYnW-- IT? "¥ . '~Tr!TYT "'tttm... ^.t. h . tr

,

Ej

ON .14!WP.2!4

Ej

ON .14/

kMAl12

Page 81- ---

\-aclJ.ieve ccnvertibility. They may be excused, if they wish tc adopt the :practices cf their big brcthers, i.e., the central banks of the majorindustrializeddouhtries, especially Britain, France,Italy, US~, WlJ.~~B hlfve oC9",~~0,g,apy increased their foreign exchange reserves

by_(~he si,jllple devi.oe

-Pt:

,<l~~;Ling ,to one anotlJ.er certainsecuritiel1l.

T~:l-spr~~t~8e

^is

,not~h~~est

^way

^Of

increasing international' liquidity ,but it is one way. As long as the leading c<;mntri!'s in the world do: not substitute for this practice an internationallY

I'" ,;'1."-:' " _ . . , .

-",greed system' cf providing non-inflationary international liq~idity,

small oountries cannot be blamed for using the same techniques.

2110 The' central banks, of Guatemala, El Salvador" Honduras .and Nicaragua signed an agreement in Managua on 28 March 1962 in, which

they accepted the general rule that members may ofifer al')d-f!,<;>llto one another special types of Central American securities to enable the buying Central Bank' to obtain currency and Li.quad, claims with

) . ,

-which to increase itf! foreign exchange reserve, especially when faced with temporary disequilibrium in the balance of payments or witlJ.

specUlation 'against its currency. TheCenti'alAmerican'se8urities referred_ to would ,carry bot'h exchange and'rej;lUrchase guarantees. If, therefore, the central bank which pur-chas edtsuch securities from another centrlfl bank wishes to cash them" it can always -se Ll, them back to the original vendor without exchange risk.

212. Naturally, the Central Am'erican banks could 'not and should not build up their reserve posit,io;t':<;Ln, this way alone.' Yet a eertain proportion of their reserves, ,!"f'-ybe as much as

50

per cent, could be built up in this way.

•

in February

}::WCN.·.•. _~

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i 2 1 4

. "l'i!

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wi

¹²

Page 82

CHAPTER VIII

. OTHER EXAM;PJ:,ES

?f ^;p

AYJ!lIl'l'fTS

UNION

21J.It,remairte tbexamin.edwo "ther minor "examl>1ei!' of ",ttempts at apaymen ts union; These are the.Cen tra,l .Amer^Lean.Monetary Union Mel.

the MricM Paymenta Union pn)posed by. the Caaab Lcnoa Powers¥1' Cairo in April 1962 ;"; '.'

214.

Strlct1yi~eaking,theCeri~ra:l

American 14dnetafy Unioni'son3.y tenuously a payments union and. fs ratherinore' o t a Monetary Oounof.L or as~ociation

of

Central Banks of Central America for the oarrying out 'oi'certafn ilmctions. The Agreement betweeri'the:four Central Banks _~ COsta Rica ,El:Salvador ,' Guatemala and Honduras

1964

set

out ·thB:Se'functions as'

.(i) to create common

po1icie~

p:J6motihg <:JoLordimitibnifud"

harmonization of 10lie monetary,' exchange,cred.it and'

, .. r. hsoaI po'licies of 'the Cintral Amerioan nations,

•

(b)

to pursue technical, rese,arch On instr,umentsof .monetary, exchangs .and. credit policy. and co-ordination of !l10netary policy )fi.tlifiscal policy,

" . , ' ',-.' , " ,

(c) ,to pro'Vide adequate financial. aid to pre'vent,excb,ange,':Md baLanc e of payments di,sequilibria, and to l:Fberali",eoap:ital movement,··',Wside:', .0entral ·America;

E<1)t,() waintain'liaiscn .arrd vto consult with Central Americ'!l1 GOVernment' in order to co-ordinate .andvhar-rnon i.ae mOnetary and' fiscal, poLd.ci.esj

(e) to expand and improve tlie multilateral 'clearing through CACH and to implement the CACH Agreement and any future

,

agreements with non-Central American countries concerning clearing or clearing credit,

(f) to propose drafts of inter-governmental agreements to achieve a unified monetary system for Central ~erica.

E/CN

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-Page

83 --" '" 1-:" '

I t is e Lear- thqt "n,cly cer is ;:;ltJ;'~o~ly ,oanoerne~,jfitb,the _f~oti)~ps of a payments ,un:i,o)1[_,:~ndeven:he;r:E), 'i'asin a sen,,¥.~ t,<:> :n:,~lI)plj'!]teni~'~' "~CACHo

• p '. _ •_ •. _ _ ' .,.L.',o"."J ',' . "._.._ .. ',' ;_

Funotion

(0)

is,qn,ly, ,tenuo/lslJli ,oonnected:wj,tb,a ,paym"ntSUj'i:j.ap.!,. _ . " .•_~ - " " ' , " " ' "n . " ' . • , , ' _' ,

Z15. Tne'Ca;e!'abla:u'6a prbposa'Y:for,·an 'Atr'icanPaymehts Und.on was. the first serfotii and:1rideed 'odll'cr'et€ 'pr6po'saT^1tor'such a:payments ':.1

mechanism originating in Africa.,i) Th<'l Agl'eeIllent for its establishment was signed in.Qa.-i1;'o;;9n2;April19,62 by ~hepl,et;!,i1f?t~:q,~JZ,.:i,es.of' _,~he",.

Casablan ca,p'qwer;s,

"r

tjp:r:qpq s ed.. s_ei;tin,~,tl.p,apa;Z!]1el'l,tstl.Pion compr ising the six member, States oJ': j;b.e Casablanca.-.gr,qup,liInd", aJ;l,;:r,oi;b,er independent

," • . .'. ", ". ", c· .•~j . ' . ' . . . _. ',- ,',. '.

Afrioan Sta.

teaPP~Yix!gfQX1

andaclJnit tecj"

in

:t;O::llJjlffiqeJf

1il{J,~P

^{• The, modus} operandi, env::i,1ilagedpy this ag.r",ement"cquld be,s1llDmarii1'ed thus:

•. . " - . ' ' ' ' ' ", ' : . , , , , y - . ; ' " . ,' .. ,,' ,- ••

-·'rij- ,L \ _, " 1:;-:' .;_ ' . ._,_ \,',', _ . ". , .

The bilateral surpluses and deficits in intra-4frican

•

(a).,Al:tcu1;':rent .antra-Afri,cantr\,nsaotiQll~U'3l:;laHbe ,pasSed

i,througja tl1e ffi~:!.tilatera+" set j;:!. Eim,en t iJ'ly§;t;!'m' , ( Compu:!.sory ,04am'lellil:lg. thrqugh tlll",1'9ym\3nts.,1Jll ipn.

Ji'

^{' r}

(b) 'Each melllMf"State iinis't'pay,:ili full a'l-,ap:i:taJ. subscription in convertible ourrencies. The amounts are ta befi.xed J?y the,Board 0:(' Direotors. The:i.t!J tial con tri,buti<)J:l <;1f

eaoh member State shall be ",100,09,0. ".

(c) The cap:i;talsubscr iptian of each member con atu tut.es his

(d) The Ul1i.q1;l s,];lall keep accounts _withtll~ Central Banks of

,th,emember States,';Ln a, unit of aq,cpU1"t .oalled ~he African unit --pf'ap,yaunt, ,.eqWll to on a

Ul?

~qgiU"

(-aY' ir'h:e

'a,1:loouri't'u:ig periiod shall be'lthreeuioh t h s . 'i

c(ii) "

-.,~}

,.

"

-:.I ::,;

">,": .

transaotions shal:!. be communioated to the union at the . -'end ot"-eacha:'coounting period. The ,net'debitCir 'oredit

pos:l'tions shall be se'tUed pa'rtlyincredit, partly in

" gollf'or conver-tii.bLe currenoies provided the oUlllu:!.ative',

ehirpl'Us'

or defioi tstay's wHhinthe membro.- 's cJiedit quota.•

'-"'j .:<',!,

',. . : - .

-(g) The Boar-d of Directors she-Il

iss;:;"~Lt'he

regulation aocorddng to which cumulative debi~ bal~c~~'are to be settled

by

receiving

cr~di t

froniand,

p~yi1g'~bldbr

convertible

"currencies tOF'th'",'^'UniOn and'^.cumukati^vs credit Qa.}ElpCe,Sc p.r"e:

to be 'S'etethd' by,'gr<\nting, credits, to or rece:i,y;i,ng gol,d or

"'6brrve1<'i1i1>ls"CurTenoies' from _toh~ Union:.'

(h)

Debitb~l~~~~ofa

^{member in}

~xC'es~lofthe:indiViduaI

^{", '}

oredit'l;.iotashall be settled immedfa.telyiliconvertible d';;encies

'I~<igofd.:i:ri

dese',,-tfing bases the lloaI'd of '

''iirie~tors ~ha'ii ~libw

^eX6ess

d~bi

ts t'o be

paidinins-ta:l-ment~: :'J£f~;e~t"'~hali

beoliarged on the excess balances., (i)

Elc~~~~'c;edi

^t

'balaric~~6:f'£lllemb~r

out'iJ'tanding" a't'the'end,

~fth~ ~ioniinartciai

^{year shall}

be:'~ethed at

^tharequest

of the member in' cohvertil;le curr"mcyei tlier' iri:utiediately or in ,itHHalments. , Inter,est shall be paid to, the ,'Ill,!lmberon

(j ) The~~:rld.ng' 6~'h'tal

ana ourren tl'livenue of 'the union shall princip'llly consist'

of,'

Ca) the

c~IXt~i s'0.bscriiJtion~

of member States

Dans le document Conf6rence of Governors of African Central Banks (Page 79-88)