Toward the Increased International Mobility of Capital Under the Articles of Agreement of the International Monetary Fund

Abstract

The Articles of Agreement of the International Monetary Fund (IMF) distinguish between payments for current international transactions and capital movements; the Articles generally prohibit members of the IMF from restricting or delaying the former, while permitting members to restrict or control the latter. This distinction seems to have been a product of the members' concern that, under fixed exchange rates, they must retain the capacity to control capital movements in order to preserve the autonomy of their domestic monetary policies, to insure that the exchange rates established by the IMF would not be undermined by speculative movements of capital, and to preserve a tool by which payment imbalances in the capital account might be remedied, should the established exchange rates appear to be (temporarily) inappropriate.