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GV TILT DOWN Royal Lancaster Hotel
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GV & SV H. Johannes Witteveen speaking while delegates listen.
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1974 will almost certainly be a year of staggering disequilibrium in the global balance of payments. In addition, higher oil prices will give a sharp twist to the inflationary spiral, while energy supply shortages may accentuate a slowdown in economic activity that was anyway likely to occur. Coming at a time when there is not yet agreement on international monetary reform, this combination of circumstances will place strains on the monetary system far in excess of any that have been experienced since the war. Two withstand these strains with the minimum of adverse impact on trade and economic growth will require close co-operation between governments and a high degree of economic statesmanship. The Fund, at a minimum, must try to keep its members from following policies that are mutually defeating. At the present time, the dangers I have particularly in mind are those of competitive depreciation and the proliferation of mutually frustrating restrictions on trade and capital flows. The beggar-my-neighbour-policies of the 1930s are not so distant in time that we should forget their lessons. Short run national interests should not be allowed, on grounds of economic sovereignty, to stand in the way of an orderly and constructive process of foreign policy formation through international collaboration.




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Background: The Managing Director of the International Monetary Fund Mr. Johannes Witteveen warned a worldbanking conference in London, United Kingdom, on Tuesday (January 15th) that the world monetary system will shortly be place under very great ???. Only a high degree of international co-operation, he said, could ave???ious economic consequen???.

Mr. Witteveen said that the main reasons were the sharp increase in oil prices and an inevitable world trading recession. He added that the crisis was aggravated by the transitional state of the world monetary system. He expressed the hope that this week's ministerial conference in Rome would make some progress on monetary reform. Mr. Witteveen said that new methods would be needed to cope with the enormous deficits some countries would run as a result of increased oil prices. He stressed that the best method was co-operation and not cut-threat competition.