82FOREIGN- RELATIONS, 1950, ZVOLUME I


  I. The Council considers that in the establishment of any Euro-
pean clearing union designed to further progess toward the objectives
of economic integration and ultimate full convertibility of currencies
the following conditions should be met:
  1. The operations of the proposed clearing union shall not conflict
with obligations undertaken by the United States and other member
governments to the International Monetary Fund;
  2, The establishment of the clearing union on the regional basis
proposed shall not prevent any one .participating country from mov-
ing as rapidly as possible toward full currency convertibility, nor
preventI any group among the participating countries from moving
as rapidly: as possible toward full currency convertibility and closer
integration, independently of the rate of progress evidenced by the
other members of the clearing union.
  "Iin order to in sure fulfillment of the foregoing stipulation, the
Nati6nal Advisory Council recommends with respect to:
1. Financial Operations of and United States Contribution to a Clear-
    ing Union

  (a) The United States-might reasonably concur in any arrange-
ments which the Administrator might work out with-the European
countries as to the provision of credits by participating countries in
local currency which might be used on a multilateral basis.
  (b) Conditional aid dollars might be made available to debtors in
specific amounts which might be used multilaterally to cover "struc-
tural deficits" with other participants. This money, as present condi-
tional aid, might be supplied by the United States.
   (o) Provision: might be made for dollar payments on an "auto-
matic" basis to be made by debtor countries through the clearing union
to the creditor countries. Arrangements should be worked out whereby
-at the earliest practicable date, and not later than June 30, 1952, net
dollar payments by debtors to the clearing union are at least equal to
any net dollar payments from the clearing union to creditors so that
the question of any United States financing would not arise beyond
that date. The ECA would fix a maximum limitation on its obliga-
tions for such financing.
   (d) The United States should not make any contribution to a fund
from which loans would be made by a clearing union to debtors on a
non-automatic basis in essentially the same way as International
Monetary Fund drawings.
       (1) The ECA may, however, modify its allocation of aid to
     individual countries upon the recommendations of a clearing
     union, to take account of payments positions of such countries
     relative to the clearing union.
       (2) provided that no action should be taken by ECA upon
     any such recommendation involving a question of concern to the
     International Monetary Fund until the International Monetary
     Fund has had a reasonable opportunity to reach a judgment and
     to express its views and they have been considered by the United
     States Government.


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