fore, is even more indispensable to the successful operations of a

•

? zsp· ^~." 1 '''··z·· r

EI

^CN,',,14,

IWP,

^,.2/4

E/

CN,.14/J'JIlA!12 Pag,>S9' ,

p,~;vm~nts up,Jon in Africa new which, by compar Lson with Europe in 1950,

" , ; ' . "',:

is.,apoor continent.:\.'",-::, " '.",.''''

..

i228,;'<The JJ.inerican grant in 1950 ,was equava Lent t<;> 1.35 p,>r cent of 't!f!'f :tpital tr"ade };Jy"EPU in that, y""r. ,A similar per-centag e grant tc i;P.e:indi<>p'eliiltmt,'IJJ.frican countz-Les, (exc;J.uding South Africa) in 1962

would

haveamounte~

^{to $152.6}

mi~1iOn:Theirtot~,ltr~d'>tbeU~~'oullted

to ~1l:,,3,ffi~llJan~~~ Su?h a' grant would be indisp'>nsabl,> in providing for.e;Lgn,exchq,pge guarantee for payments by the Union 'to c:r"edit6r

. --,' ~. . : 't . ':'},':~ , ' . . ".'i" "< ,.

rn'>mb'>r<1,' to""assur,'" Hmit,>d ' convertibility of cr,>ditor claims 'agami3t'"

thl"Jin;Lep

~,q in

Vr()viding initfal cr,>ciits positions for the invest"elr'

, . . . . .'" ,.,,", ," ";, 'C',:

member-s of tll'> APU•

•: ' ' , ' . ' .. '.'J " : - . •

, 229. As wall don'> .und er- the EPU, the,,(Urican payments union at i is inception would have to d.i.spoae of th,>" , ' " , ' ' .

acc~ulat,>dbilat,>ra.l d,>ficit~

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

among its members. Som'> of thes,> accumulat,>d bilateral deficits could" .. .. . . '

or they could be funded. Th,>y couLd.

r e ser-ve s cftlie deficit h6Untries"or be, partly or wh911y written off

b~,p~id for out cf the currency

tjley could be paid

fo~~ut ofth~i~itialdebit

^positions. If tHey were

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

,fu,nq,ed., the amortization and int'>rest payments under the"funilil1g arr~¥gements should be included in the periodic settlements wiihin:

" the Union.

': 230,. The,oredit and, i:debi t quo-tas available to EPU members proved to be inliiflpensablet,othe commercial and monetary ll)ultilateralization ,wi,thin the E;Pli ", Since thedeg;re,e of

bilateralis~in

which Africa is'

involv'i'O- ;is much greater than,that in.,which Europe was involved in'1950,_,_{' .} _. _.,', ...^' ^, ^{, . '} ^,

"suciho;r>edit alld debit,'lu,otas :will

b'i',~t

,least as important (indeed much mcre impor1;ant).inlJ,n AfricanpaYlljents unio~Jf,a signifioant

m'i'f'st.U"<1 of COmmercial andm9netar,y mWtilatera;J.ization is to be effected,,- , '.." , " ' . " , ' . ' . ' , ' , ' <

by it. "tn"tl!l.e· Euro:peanpaYIl!f!Uts uni9lf,in 1,950 .the total credit quo tas were eatabhahecLat 15;:per cent o!,cE;\p:ppe's aggregate trade.

7,,; ' , . " , .

~3i.

SJ.:n6e, ho*eV'er,

1ntra~Eur6J?eantradein

1950 was about 50 per certtol

aggi~;a.teEuro~i~a.ntraO-~

in' that year and intra-African trade is nov cnit Iri:the:rieighbourhooa. of''lOper cent of aggregate African

ElaN• 14!WP. 2/4

E/aN.14/MJA/12 Page 90

'.)

.::

trade, a similar percentage wculd wcrk adversely against African unless

. : " . ' " t->.

the .credit _~~~!as tookaccount.of. the 90 per cent or sO ext~a~African trade.. If the payments union was not to 'be

r~stricted

to intra.:..kf:dcan trade.~ndpaymentsbut extended to include some

.: -i:.J.' .,y,i

per oent on aggregate trade wculd ._"as

We;Ll,

~ 15

. for thedeb,it and cr~d~t ~uotas.

L-

.-,'-~,< '•

extra-Afrioan payments be it justiffable':'basis

232. Equal1y so~ thlil'l1lile.<j. pf,.t,~\",)llemlJers of.an Afrioan payments union

:-;' ^,-',':", ' , ' : . . :

t.Q,reoeive oredits· or g,lIal;1t!3J ;is, llo,-,I$'i'Olthan.i t,ras in 1950 for. the_..

..- " " ,.. "

members of the EPU:" As we have a;Lrfla<Wno;tep'r,thatthere w~re four types of credits and grants extended to the EPU~i9mbers bliltween 1950 andl958 (see paragraphs 85-89 above). All four (i.e., initial credit ba1al1oes".llotted as

gr~~ts,

normal EPU crsda t;

ah;:;(j~nial

special credit, 10,/ilns

grant,,~a~

^initiai

cr~dit

balances) could De usefully employed

.. "_.... ." '. ," .. " "',1"'\"

.:i,n, tl-le Afriqanpayments union •_.

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

2'j3.c'The obligation, h()wever,of the..un,ion t.o make gold payments. to cred:l.tor"'hations and of defioit members

*0

the union at eacl't";eriodic_{··.. -r-} _,",

~ ,:

settlement date does,notapPe<\r to be needed un\LerpJe'esent-day Afrioan conditions. The curnoncy systems

iJ:1

,AfrJ,oaatpresent are dominated by the Frenoh franc, the British sterling and the

USdolla~'(l:,ibe~:i.a),

-,",~,....

,and .it WOUld, th"refore, be more sensible to require that payments for oredits g-ranted and credits ~eceived^were ~ade in these lliajor'c'oftvertible currenqi"fl," A

lqgical~dapta

tionof the EPU principle wou'ld bea

" 0 " ' '

-oo~b.ina,tion

of oredit given or received, on

th~

one hand, wiih"[convertible qurrepcY,J'eceived or,paid, on the other hand. The re~uirement'that

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

deficit member,s must pay a certain: share of theiradiiiticnal ' deficits during an account ang period

in~on;re~tible

currencY'i¢'6t"fa. have' the

':g ^{! ' - : ,} ".'.-..-.' ::''', ,'- -",-'::"-,-'" "

salutary effeot

o,f

deterringdefi~it members trom 6Y,'er-bor'ro'w'ing and of induoing them to earn

coni~~tibl~

^currency. The obligatfondf a creditor member to advance

~'

credit to the union only';'-

if

mabched by a certain payment of'convertiblecuirency to him~~ is~<\gre~t stimulus to lending and, what is more,helpsTthecreditormemb$r. top<\y for imports

r~ceiv~'d

from the outsideworl<i. The obligaM;on to!Jlake

• ..

•

CN •.

1...

41lW.iP .g/ 4 JillCN .141

AJRA/12

"'Page

91

. payments in converti?le currency in lie".of the EPU one ,of' making';

payments in gold woy.1d.be mor-e suitable toAfr.icancondit.ions •.'

234 •. The experience 'Of EPU is also invaluabI'e"to

any

African payti.ents institution in the area of ·monetary multiIateraliiat'ion. Indeed, monetary illultilaterp,1ization is eSSen ti,l1, f'or,t;l;'ade 1,;Lb.eralizatien and_.. _,'" _.

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

J~'ade expan si on cln. Afrioa. To these ends, the principle of.th'e.'E8U commends itself, namely, that the foreign exchange rates between the member countries' currencies should be f;Lxed 'by. the members tb.emselves

\ ' , " ,:."" ^; ,'..

in their bilateral payments agreements, possibly in consultation with, the I~&•. The transferability cf all union currencies Within the union at the'de'hgnated' exchange rates should be automatic and as early as

.• . . . , " . .. ',' ..; ;:, ,~:L~;' .'-' ..

pos;iiible an exchange arbitrage (whioh, incidentally, indirectly existed trok May'

1954

between many 'African

currenc:i;e~) ~hOuld

^be

settled for all currencies. The fight against

inflatio~

^{'and the}

flight of capital should be vigorously pursued. Furthe:r;!Ilore, the union should

~ndeavour

^to

exte~d

the transferability of the African member c1i:hencfes 'outwards beyond the 'territoria1 jurisdiction of the iMioh~'This can be done by direct negotiations between the union and

the other maj'br 'cur r-ency areas. This,

however,~akes

us .beyond the strict limits of intra-Afrioan payments into the area of a monetary_, _, fund. But an African payments union need not be confined to intra-African payments alone.

235... Though the currenoy system in Afr,ioa is .compar-ab Lecto vthe currenoy system in Eur~pe ~

1958

when the EMA replaoed EPU,. the general

oonditions are utterly different and many purposes of EMA. are irrele-vant in the general oontext of an African payments union. Neverth,,~ess,

one rilinorprfuciple might be lifted. from EMA ini;o the possible African paymetttsunion.1'hatis ,ihe m{"tua]'

oblig~tio~to

lend currency' 'between" seitlement:1eriods. Under Afrioan conditions a speedy payment

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

for

iID~brts

^{is 'Often}

d~sirable.

The mutual obligation of oentr<>:LJ'anks. - " , .>' • .- • •

to lel1.d

()urrencie~

^to

e~~h

other facilitates their

promJ?~ paymen~sand,

what is more, the liquidation' of such loans at settlement.. days is simpler than the settlement of trade claims.

Ej Cl'f.J:4/WP.2j4 Eij Cl'f .14/I\:J\fLAj12

Page 92

236. Ot4er Vil,luabl?:princi:ples",r.\l the exchange guarantee'in designated convertible currencies and the periodic settlements

tn

^.~esi~ated

. dUft-enCies' These are, however, inherited from. th.e EPUapd have alr'eadybeeridea:'ltwl th in that context.

237. A number of, CACjlinnov<;1tions, on the other .hand', 'would beCWbrth-whiJ,e qonside,ring <;1ndadaptipg to the purposes' of an Afrioan 'payments un i.on ...

.".;.-:,.,.-, v, ~" ^{' . '}^I.'.."

(a) ,,'(by

tbeacc"Ount"ing' 'procedtU"es 'used

by

CAcn,

the rule of'makmg tbe quotas more'

fleii'bi~ by

vote of the payments union by ni/tinsisting

oh~ettlerit'tnlesh~

.euo ta s are exceeded by a certain

(propdrtioriate)~~o~t,

(c).~he

support of exchimke restri6tions in

individ~~lco~t~ies

'by. the payments'uni6riin t;1o ways, first; by <;1dopttng monthly quotas for bUying controlled

'biJrr~noi;~s

^{in areas} of othef'memliersan<i, second;by~ccepting oheciu~s ^and

·:,other paymentsord'ers from the country with

e~change

^{con tr-o L}

'.",^:

in ar eas of other members only i f they have'beer;

vaii<iat~d,

the standardization and cheapening' of bank tohargea for foreign means of payment and t1',ei;16ti tutionoiAfrlcan Convertible' Cheques, .

(e) the establishment of a discount house forintrallfrican industri<;1J, export ss. . "'.,'

(f) the cz-aat Lon oCinternational,liquidity to meet· tempoi'ary balanoe of".J:J('wmen tsq.isequilib.riurh through mutual sales of

Afrioap securities with exchange and r-epur-chase guaran'te'es.

•

r; ;-. ,

itself on which it rests.

; :238.,

Penhapa ,the

most'ou~staridinglessonof

thesepre';ioJs ex;eriments l!' is that. a Nyments union"likeall struotutal outg.t.\;wths

\~i:ll,havetc

'f,:j,t,;ltself .intoite environment in order to

ftmoticnb~s:t:'

^{A payments}

:cwO-on 'isqui.teclearly a finanoial sup'erstruotiire.The 'measure 'of its .""uo.qess in. deIil1ingw':tth t1(e pro.blem' for 'whibh i t is

c()ri()~rned

^will

depend onthe'infi'astr1i6twe and the lower· tiers of the supei-sti'l,ic,tpre

.. :.1_ r .. ,

..:-- ,".(¥" -"'~'r- &

•

239. ,} p"yw,;,pts 'm,ion can he Lp rto solve some 1f)9n"~i3.;J;'Yhtr~H"!9re~:j.t

i3.ndf,9;r~:j.~. e,c:oha,pge prOblemsj;o ooyer .the"xistillg d:j.seq"iliQrii3.,in the 'baLan ce of pi3.yments~ I t can helptQliber,,;C.ize trade. I t can

':;.~

,c:pr,~Y;:L,(i.""p,p;rA"1J,tjlingspace in whioh ,FF,oduo;tion .courd recove+, o+', tp.of,ease

" d .• _.'-"",',J "_,, ' j,OJ... '...~," , ... '.. " ,

and maks p()l'sipl" :tJ:;te unInt ar-r-upted fl?w of,,!;pods thereby promotillg ..

. ':'" .- .',r . . . '... ,' ;",..J..._ '. " ".,' " . ,. " . 0 . ' '. '__ '" _. " '" " ''''0 ' . ' .-..._

internal f:iJ.1ancial stability, but it oannot remove the rei3.1 underly:iJ.1g

"'\' ,'~",,"--' "'. ',,' , '".:' i. ,''''', :-" ,', ;"i,',"..; -o!:,':,: '.. ; . , : ' " .,. ": . ". .'

oi3.usesof baLanc e of payment s disequilibrii3. ..,:~. over~prodlictionof

oM

⁰log;;",

rebi~iess

governmen'tspeniJ.ii'igfu1d'ko on.

:iJ.1_effici'~ntfacto'r s ii{hfl'§.'hbn, _b~bkwarcl

underproduction of good.s· :iJ.1highdemand.;'

proeliib1ion, ' obmpi3.ratively high costs1ria. prices,

24?~,.

'if'

:tJ:;t~\' r-espect the.illfra~t;Jl?!:ture of.theHrioa~Tegiol')compares less f'avour-abIy with the other regions where payments union, R-i':Yt1?,e,en :iJ.1 operation and , oonsequently, oonstitutes a basio disadvantage. The Ifi'ie:rnal triiri'spb;t sys't~m of .ll1rib~ is woefully underd~v'~lcped. . 'I!JJ.e (,oristrliCtion 'ct t:cansoohtlJienti3.1 road.'hetw6rk haEfhard;J.y yet begUn'.!

ci-cl1ls'-6biliiit:t<y'tfarispobt of goods is prohibitiVely costly,ancr'ttine-cons'uJn:iJ.1g.:trii'il:nd6rcoasti",1 .

w;:(t~';'transporti~' ~i thermia~v'H6p~d'

in';"cisquat~~Tlie

dev'eropineritoi' mcdefn harbours

adeq~at~to~ffl-'

c{\;rlthandririg of goods has'Ji;"rdly yet begun and the hatidling of

comnidditie~:fu

African pb:ftsisslow,

o6~tly

^and

mseour~.Fr~ight r;,;i~s

ahdhatidlirig

cliargesar~

^:iJ.1

co";~eq~e";~e

^compar-a

tiv~i3

^high;

24~,~,,: Tll~:;~~reles"and tele~?mmunicatio~ss;)Tstem :iJ.1 Afr:i,9a" if it can be called thi3. t, is painfully sLot.. , costly and unreliable,,, Internal air mail services in .the region are undeveloped and the commercial 'bankcheok:in/,~ysieln'needs time to develop yet • Credit irif6rmation ,.

. 6n fii'rnsins1:deo:r outside Africa _i~'hot re'adilY avalla:ble _:Ln'th~' reg:i:6A

ar;driew~paper an'd'W:l::reie~~

repotting of agricultural, commercial, financial and :iJ.1dustr ial news where i tfexists is':iJ.1ad~quat~.'"

242 ."i'Sbe _~~r'~;

no rapid:na fiorial cheque clear:iJ.1g system eiists

any-"here. ?OOly{Yla fewi6*ns orldf.ge c6IJiJiierdal

centresistl1~r~ a: ...

cheqw:l'ci'e'ifiing

iiyst~fua:ta,ll.

There {;; ha'rdly

an'yweli':org£hiz~d

local exohange marketprovidfug botb. spot and }of.rardfaci1:i.ties arid

E/CN.14/1fP • 2/4 E/CN.14/AlV!A/l2 Pag,,,,,;~t4:,',,,,:",' -,~::c:

;.,.-~ '-"-'.i::r^i"J~ ~~ ~',' ',' r ,

permitting exchange arbitrage. Outside a few towns there is no discoUnt market, and there is hardly any market for international liquid,ity. The African countries, where there are adequate laws

defining the .rLghts and obligation attaching to negotiablec.instruments and providing legal recourse in case of their violation are few.

243. In general, African public administration leaves much to be desired. And even if it were more highly developed, the political fragmentation of Africa, the multiplicity of bilateral trade,and payments agr ccmen ts"tl:ie ·elabora te foreign exchange restl',ictions, and import and export controls could hamper trade. As it is, the issue of trade, ;finanoe and tax documents is a costly and time-consuming business.

244. The neoessary types and quantities of modern faotors of produc-tion capable o,f a high level and high quality producproduc-tion iI1 all Lanes of industry simply do not exist. 1'f:rican, countries are orily,slightly

,>...,.:;i,.,<> -':-",\~"I ^{' ' ' ' r} ~_'., ' ; ; r ' r~.·, ^,-., _"Y_'~\'~_'_; ^{: .} '.'~_ ':~--'_(' ^.. :'~'i~'~':'::_'»J::~; ':'?:":c'C,SIiCi

, spe'ciaHzed arid"hence hardly comp'Lemen tary' wi th one, another. The'

~'~... ,:'.';';:,!--;.:~~.•.. :':' '"", ..',.< ... ,"; '--.",-, "-'. ,_i~ ,',;_,:(;{<" .,:,'r .. ;'-:'_..^1,_ ';-"_";-':"'<;

possibiiHy'

of'

pi-ofi table"exQhangesis fesh'lcied' to a very narrow range of goods -- oil, mineral ores, coa L, livestock, fibres, a few foodstuffs and beverages, very few industrial goods. That is the dominant reason ",hy intra-African trade is so slight. In

1962,

for example, intra-African exports amounted to only 8 per oent of total African exports. It is now probably somewhere in the neighbourhood of 10 per cent ,

245".

Moreover, the low il1tra-African trade is furthermore plagued by contraband trade. As long as import and export duties are as high as they are, and as long as various imports quotas are as low as they are this will continue to be so.

,246.

Finally, the African trader or manufacturer cannot be sure that the fiscal and financial ,policies of his government "ill succeed in achieving the purpose aimed at, such as preventing inflation and stabilizing their foreign exchange rates.

•

" t

g'-•

E/ <W".14,/,'WP, .?e,/ ⁴ E/

^eN

.14/AMA/12, "

Page95 '

247.

As long, then, as the infrastructur€,'and the lower tiers of the superstructure for a sucoessfulA,frioa.n·,PaYljli®,~~,}Jrti9+l has not been built the full benefits of a payments union cannot be obtained by

sett.ingitup. ,StrictlY-speaking, the building of'the ilifra13tructure' would-,seem to be thepl'ior thing', Nevertheless "e'fen,1'ih"'the' absEMbe of thebtlildingofthe infrastructure ili allits':comii!Leteness,

'a ,

paytnen\istuiioriwot+ldbe Clttendlid by partial but rea'! bimefitsfi6in the ve1!y ' s t a r , t . " " " ' , ) " " ' . " " " ;,,'" " ' ;\ " , " ' !

·,~':'~:·,r,r\', .~ ',i:;' " " . ," . . ' , ' ",~'~',,:'..J, .,'" ... ;.'

248,$i'ich'

apa;9'ments union 'wou;Ld promote trade libe+,aUzation and

\'><"'~"'·":'·".':":"l:·;',"·':;"·" ~'--,:""""'" ·,··v:b~·:l ^{- '} ^,-.

commeroial multilateraUzation and expansion. It would promote

~.,,, ;:d"'''i·T~'.,1 ",-- ", ,~,:,:: , . , ' , , ' '"h~" ;.1,,) ;,,: ,"

monetary and exchange multilateralization. Convertibility and

,,,i.'

stabilization would follow leading to our enlargement of the banking buaanasa :in Africa:; ·.ThEF'Wili6:ii"wduld^ccllelp

to

ovllrtlOme temporary bs'Lanca-of paymeliits'dii'f±cultiesandgiva "Eitireather "fot":fundarIJen

taibie~dJu~t:2:

^',,'^j ments of ",deficit economies. IriparticUlaril!woul'dhelj)'toliiake'the "0

African economy .in,tElrnationally compet'ftive~'Above':all':'H would'-' , c ; " "

encourage co-opera tive working of Afri6ancuCim t:i'aj(,'·"Ba.ii:ks ari'ci4Moneiary'"

authoriti~El~dp+,ol\l'?,1ietheh~bi11. of inteJ;'-;governmentilJ, '}onsu:jotation and CQ.,0Ilerati"on among .bhe Afrioan .countr-Lea . thems"i'.1v;e""._{'. 'I}_f,:'_,'ti ",:, :", !; Ct.': '.,." , , ' '.:,: '" . . '" ;,: ' - ' . ' ',:' ' .. , ....,•.,.~"" -~ \," '" ^<,j',.c"

249., '

What this means" ilj,"'effect, is, 'if'"there isa'eiti&0'ng desii'efor'''' a payments "union it must be reinforCed bydeliberli'ie'steps being taken" '"

Eli!lluilrtaneou;slywi th i,tsevcilutibn tobuild'ias"w<eH 'iih'Ei'infrastructure

,'.~,

"1.[..'

.'.,:..

, ""

.', t

,'.'.: . ".,,"

.... .t.J

.: .>

'.c"1 'i.'_

'",,'.'

CHAPTER X

,".,.

r· "L.. ..';

tW9,fold,

.:J: .:; : "

multilateral-cluded from dispensing clearing credits.' Its ai!!1s may be

> • ';){".~ - - • •

namely that it helps t~multilateralizetrade and also to

.:.;;

ize payments inside the union area. A payments union does the same things and, in addition, helps to multilateralize debts by providing clearfugcrEldi't~^rand. balance

Dr patmen

ts'credits. The paymel'1 ts uhion here outlined';',i\if it were realizeB.,c'iiould satisfr the requirements

of'" .

Resolution

81(vh·

^J ^{• . .co} ^•.^r.

'--" ' :"L.': '

that th~~:C~be thre,,' sources of working capital or, cr-ed^i,t available,

~A^"ir

251. The review of actual payments union experiences has revealed

to such ~~!lYIll(lnt" union." They are mutual or reciJ:lro,calcredits,

non-mutu~l or collective credits, and gifts or loans coming from

-.;.,.

within or without the payments union •

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

252 •.' Tp,e':f~J?S,t,typemsy be' 0bta ined from a Ll. OJ? editoI.1 oountr ies

within the Union. 'by ,requi]?ingtheIl\:.to lend thewhole"of thei]? surpluses to the Union. These aooumulated surpluses so lent to the union oan be

. . - ,:!:',:o,,'\.' -.. " ,i1 e,::~ - - .

The or editor oountries are thus

~?;support,themonetary to the defioit (weaker) union uses the monetary strength. of the stronger

~ ^. ',_:,"~:' ^'. ^{.. ' ,} ^-:i:) 1_~:J.;r, ;.):!" ",'.,.:" :,;':,1'-'.'1:;

weaker. In effeot, howevElr

L

by. extending :credi,t oountries the latter are really being enabled to or editor oountries.

buy imports from the finanoing their own exports to the defioit oountries and thus also preventing dis-oontinuities in produotion, employment and national inoome whioh would otherwise have resulted inside their own eoonomies.

253. The seoond type of or edit - the non-mutual or oolleotive - may be provided by the or editor and debtor nations alike through the payment of oapital subsoriptions to the Union and so oonstituting the fund from whioh the latter grants its oredits. This was what was envisaged in

• p . ? J 5' nn§"~',

EI

^{e N ,}^_

'+,',4,/WB,' '02/,4 ,

Ej

.14/A,M4A12,

Page 9 7 , ; ;

•

the Casablanca Afriicaif1'ayments Uniion.Part of>the European' Monetary, Fund wasobnst'ituGted:i.h''thiij:;iwaY, the other part','beingdf the la'st·

type -' a" gift: 'frolll the US Governlnent :a:n{tinher:iited' f'r'om the EPU',·

254.

The last sour-ce of ;:redit'

(o:rwo~king

capital) of'a payinents un i.on may be in the'.form

~i

gifts;'nd/or

loa:ri Th'ernay

come eii ther from wHhin the un Lon or from outsiidi'i't.

'As' ~i:ready :i.Udicat~d,the'

European PaynietP~s''U:h:i:onopei'ated 'With1i> workingcapitaLwhichwas "

partly a 'dbnation' ¥.rom the United Stat&EJ',Government and partly normal: ' mutual cr'¥dit:,''prG'vid",d, Wthemembers it\'sUFpltiil. ,. ;'Some:meiIiber'!,' '.""

countries, i.e., Germany, provided'ex,tra'( abnormal)' c r e d i t ' . "

255.

Whenever: the·#b'rKmg ,capital, of

a

paymentstinioir consists'!!'.' ^{> .} exclusively 'of':Oapii!al'subscriptioris ,'it'is usually tr:eatedas a s,1iook of peanahehi.>bai:Hdng calpoital .wh!Fch'is leh'tand're'-'lent !Ldinfinitum.

This so..:.ca:Ued revdlvirigoreiJit:i:l:5 poaeib-:Li:u;rily:,,:ifeaq~:!;l;eQj;gr

member'·cO'ulJ.a bs·re'liediipoh."to ':Jepay his 'debt. Balance·of'payrneniis" ,:';!' ".

oredits cotl.l&'ah'lo'be·t'evolv'ihg:o-redi t only', if each Clebtornation "t,nc':' oould become; a ored'itor':haii:Loii':witl:d.U·,iiLtlShort time With'complete ';.' "" ^'.I'LV' oertainty.Usually" this 'IB'hotautomatio; 'It wciuldrequire'measurE'iS'"

'leo::

to enable 'thedebt6rs<·froE'ixp'and eipdrts....and/o...'.'.to'..'-¢\lJi.traot impor·t'si:" "L'" -,.c

,.: ;~".,'r.; .' .:-.", "":C',' " . r ' .. ' . . . ~' ^";.;;:

256.

whenever theworkiXlg capital oonsists exclusively or even largeLy of mutual

c~edits,the

^{amount of}

w6~king c~p:i.tal::fluctua'tes

Ji'-thiiracle"";

"r ~

condi tiona. The oredi t8 extenci.edio defioit members would flu;iuafe '

,',

^.;

,..,'

.;-',,"

to Hsiiorkih

g

grant frc;d'the' in sympa,thy . · '

In co~trast

t'6 the revolving cr'eci.itsmentionedabove these

maYbe'c~ll~~ad

hoc credits:

'id'~O~'C~~dnt~s

^{such may}

nev~'"

,. :-- -: 1, , ,:.J..~' J. ,_.. " ) . . ' .'':~.. " ' " , , . , .,... , ,.., ! . ,

be repaid during theburrMO!l ot"a;'payffi'ehtstlb:ioi:l agreement bhi they

y:f tfi:'1 ,'.. '

are best. suited to maintaining trade at a high level ...

257: ' It ha';';i~eady b~~nin:~i6atedillat'~v'~~l

th8:&i"than>t"hk: EPU,'it

'c~) ,. • c.'. ',:: ~:,;,' .: "',.,;',; .,:'.>';".t", ,:1'" :::f.[ ;~. r . :,:, :'," .'~ I.:C ' ; ' . ; , ' , : ' , : , - . .

the time of its inception an Afrioan Payments Union now"or in the 'near

. , ' ; ) ' \ " ) . ' ! ' '1".,) .i"::i,'I :". ':' ":.' ,) ,.• '.. • -'. . ,,:.',' , " : :r.:~,

future is deserving at''the ihird type of contribution oapital namely

~ant~ ~nd. :i;~ns. ~'itho;'t

^the

in

^i:tial

.: - :,!!-,.~:,':r.; ,J';':"" '. . .:,.j''','.i.!':.. J' ,. '.

United States the EPU-t;ou::td never have funotioned as sucoessfully as

:;'i::'-:" :; " ·':.-P'.'." ...;~ ^;'^,:.'iF .",~.'.", ^;'.',;: ^. ^" ' " . . . , , 1 ' .. '. . .

it did. In the oase of the African Payments Union such contributions

EI GJIT.1·2/ ⁴

Ei/CN.14/AMA/12 Page 98

•

. ,c;

working ca:pital also operate. its_,

of mutual credits.

fund in,augmentation

need, not be restricted iIIo the:US .a.I orre but other,.developed oountri·e.(

might consider giving similar help also. Contributions migllitalso come from,African countries 'themselves especially those wh0 alread3'"

have counterpartfupds,-tQspare._{' .} _.;.'.: '. .t.. '... ",i." "- -",: , The argumentl+as also indiqatedthat the African Payments Union should

258. Since olearing cr eddt is·'.theicentral ,and most' s±gnificanX f'ea tur e 'of payments unionssomeunders'tariding of the na tur e oi",'thi,s.'

Dans le document Conf6rence of Governors of African Central Banks (Page 92-104)