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ELECTION OF EXECUTIVE DIRECTORS
1. The election of the elective executive directors shall be by ballot of the Governors eligible to vote under Article V, Section 4 (b). 2. In balloting for the elective executive directors, each governor eligible to vote shall cast for one person all of the votes to which the member appointing him is entitled under Section 3 of Article V. The seven persons receiving the greatest number of votes shall be executive directors, except that no person who receives less than fourteen percent of the total of the votes which can be cast (eligible votes) shall be considered elected.
3. When seven persons are not elected on the first ballot, a second ballot shall be held in which the person who received the lowest number of votes shall be ineligible for election and in which there shall vote only (a) those governors who voted in the first ballot for a person not elected and (b) those governors whose votes for a person elected are deemed under 4 below to have raised the votes cast for that person above fifteen percent of the eligible votes.
4. In determining whether the votes cast by a governor are to be deemed to have raised the total of any person above fifteen percent of the eligible votes, the fifteen percent shall be deemed to include, first, the votes of the governor casting the largest number of votes for such person, then the votes of the governor casting the next largest number, and so on until fifteen percent is reached.
5. Any governor, part of whose votes must be counted in order to raise the total of any person above fourteen percent, shall be considered as casting all of his votes for such person even if the total votes for such person thereby exceed fifteen percent.
6. If, after the second ballot, seven persons have not been elected, further ballots shall be held on the same principles until seven persons have been elected, provided that after six persons are elected, the seventh may be elected by a simple majority of the remaining votes and shall be deemed to have been elected by all such votes.
(b) Articles of Agreement of the International Monetary Fund, July 22, 1944 1
The Governments on whose behalf the present Agreement is signed agree as follows:
The International Monetary Fund is established and shall operate in accordance with the following provisions:
1 United Nations Monetary and Financial Conference, Bretton Woods, New Hampshire, July 1-22, 1944: Final Act and Related Documents, pp. 28-65, Department of State publication 2187, Conference Series 55; also, Department of State publication 2512, Treaties and Other International Acts Series 1501. Agreement signed at Washington Dec. 27, 1945; effective Dec. 27, 1945. Public Law 171, 79th Cong., 1st sess., H. R. 3314: An Act ("Bretton Woods Agreements Act") to provide for participation of the United States in the International Monetary Fund and the International Bank for Reconstruction and Development was approved July 31, 1945. Agreement establishing official relationship between the Fund and the United Nations was approved by the General Assembly Nov. 15, 1947.
ARTICLE I. PURPOSES
The purposes of the International Monetary Fund are:
(i) To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems.
(ii) To facilitate the expansion and balanced growth of international trade, and to contribute thereby to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy.
(iii) To promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
(iv) To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.
(v) To give confidence to members by making the Fund's resources available to them under adequate safeguards, thus providing them with opportunity to correct maladjustments in their balance of payments without resorting to measures destructive of national or international prosperity.
(vi) In accordance with the above, to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members.
The Fund shall be guided in all its decisions by the purposes set forth in this Article.
ARTICLE II. MEMBERSHIP
SECTION 1. ORIGINAL MEMBERS
The original members of the Fund shall be those of the countries represented at the United Nations Monetary and Financial Conference whose governments accept membership before the date specified in Article XX, Section 2 (e).
SECTION 2. OTHER MEMBERS
Membership shall be open to the governments of other countries at such times and in accordance with such terms as may be prescribed by the Fund.
ARTICLE III. QUOTAS AND SUBSCRIPTIONS
SECTION 1. QUOTAS
Each member shall be assigned a quota. The quotas of the members represented at the United Nations Monetary and Financial Conference which accept membership before the date specified in Article XX, Section 2 (e), shall be those set forth in Schedule A. The quotas of other members shall be determined by the Fund.
SECTION 2. ADJUSTMENT OF QUOTAS
The Fund shall at intervals of five years review, and if it deems it appropriate propose an adjustment of, the quotas of the members. It may also, if it thinks fit, consider at any other time the adjustment of any particular quota at the request of the member concerned. A four-fifths majority of the total voting power shall be required for any change in quotas and no quota shall be changed without the consent of the member concerned.
SECTION 3. SUBSCRIPTIONS: TIME, PLACE, AND FORM OF PAYMENT
(a) The subscription of each member shall be equal to its quota and shall be paid in full to the Fund at the appropriate depository on or before the date when the member becomes eligible under Article XX, Section 4 (c) or (d), to buy currencies from the Fund.
(b) Each member shall pay in gold, as a minimum, the smaller of (i) twenty-five percent of its quota; or
(ii) ten percent of its net official holdings of gold and United States dollars as at the date when the Fund notifies members under Article XX, Section 4 (a) that it will shortly be in a position to begin exchange transactions.
Each member shall furnish to the Fund the data necessary to determine its net official holdings of gold and United States dollars.
(c) Each member shall pay the balance of its quota in its own
(d) If the net official holdings of gold and United States dollars of any member as at the date referred to in (b) (ii) above are not ascertainable because its territories have been occupied by the enemy, the Fund shall fix an appropriate alternative date for determining such holdings. If such date is later than that on which the country becomes eligible under Article XX, Section 4 (c) or (d), to buy currencies from the Fund, the Fund and the member shall agree on a provisional gold payment to be made under (b) above, and the balance of the member's subscription shall be paid in the member's currency, subject to appropriate adjustment between the member and the Fund when the net official holdings have been ascertained.
SECTION 4. PAYMENTS WHEN QUOTAS ARE CHANGED
(a) Each member which consents to an increase in its quota shall, within thirty days after the date of its consent, pay to the Fund twenty-five percent of the increase in gold and the balance in its own. currency. If, however, on the date when the member consents to an increase, its monetary reserves are less than its new quota, the Fund may reduce the proportion of the increase to be paid in gold.
(b) If a member consents to a reduction in its quota, the Fund shall, within thirty days after the date of the consent, pay to the member an amount equal to the reduction. The payment shall be made in the member's currency and in such amount of gold as may be necessary to prevent reducing the Fund's holdings of the currency below seventyfive percent of the new quota.
SECTION 5. SUBSTITUTION OF SECURITIES FOR CURRENCY
The Fund shall accept from any member in place of any part of the member's currency which in the judgment of the Fund is not needed for its operations, notes or similar obligations issued by the member or the depository designated by the member under Article XIII, Section 2, which shall be non-negotiable, non-interest bearing and payable at their par value on demand by crediting the account of the Fund in the designated depository. This Section shall apply not only to currency subscribed by members but also to any currency otherwise due to, or acquired by, the Fund.
ARTICLE IV. PAR VALUES OF CURRENCIES
SECTION 1. EXPRESSION OF PAR VALUES.
(a) The par value of the currency of each member shall be expressed in terms of gold as a common denominator or in terms of the United States dollar of the weight and fineness in effect on July 1, 1944.
(b) All computations relating to currencies of members for the purpose of applying the provisions of this Agreement shall be on the basis of their par values.
SECTION 2. GOLD PURCHASES BASED ON PAR VALUES
The Fund shall prescribe a margin above and below par value for transactions in gold by members, and no member shall buy gold at a price above par value plus the prescribed margin, or sell gold at a price below par value minus the prescribed margin.
SECTION 3. FOREIGN EXCHANGE DEALINGS BASED ON PARITY
The maximum and the minimum rates for exchange transactions between the currencies of members taking place within their territories shall not differ from parity
(i) in the case of spot exchange transactions, by more than one percent; and
(ii) in the case of other exchange transactions, by a margin which exceeds the margin for spot exchange transactions by more than the Fund considers reasonable.
SECTION 4. OBLIGATIONS REGARDING EXCHANGE STABILITY
(a) Each member undertakes to collaborate with the Fund to promote exchange stability, to maintain orderly exchange arrangements with other members, and to avoid competitive exchange alterations. (b) Each member undertakes, through appropriate measures consistent with this Agreement, to permit within its territories exchange transactions between its currency and the currencies of other members only within the limits prescribed under Section 3 of this Article. A member whose monetary authorities, for the settlement of international transactions, in fact freely buy and sell gold within the limits prescribed by the Fund under Section 2 of this Article shall be deemed to be fulfilling this undertaking.
SECTION 5. CHANGES IN PAR VALUES
(a) A member shall not propose a change in the par value of its currency except to correct a fundamental disequilibrium.
(b) A change in the par value of a member's currency may be made only on the proposal of the member and only after consultation with the Fund.
(c) When a change is proposed, the Fund shall first take into account the changes, if any, which have already taken place in the initial par value of the member's currency as determined under Article XX, Section 4. If the proposed change, together with all previous changes, whether increases or decreases,
(i) does not exceed ten percent of the initial par value, the Fund shall raise no objection,
(ii) does not exceed a further ten percent of the initial par value, the Fund may either concur or object, but shall declare its attitude within seventy-two hours if the member so requests,
(iii) is not within (i) or (ii) above, the Fund may either concur or object, but shall be entitled to a longer period in which to declare its attitude.
(d) Uniform changes in par values made under Section 7 of this Article shall not be taken into account in determining whether a proposed change falls within (i), (ii), or (iii) of (c) above.
(e) A member may change the par value of its currency without the concurrence of the Fund if the change does not affect the international transactions of members of the Fund.
(f) The Fund shall concur in a proposed change which is within the terms of (c) (ii) or (c) (iii) above if it is satisfied that the change is necessary to correct a fundamental disequilibrium. In particular, provided it is so satisfied, it shall not object to a proposed change because of the domestic social or political policies of the member proposing the change.
SECTION 6. EFFECT OF UNAUTHORIZED CHANGES
If a member changes the par value of its currency despite the objection of the Fund, in cases where the Fund is entitled to object, the member shall be ineligible to use the resources of the Fund unless the Fund otherwise determines; and if, after the expiration of a reasonable period, the difference between the member and the Fund continues, the matter shall be subject to the provisions of Article XV, Section 2 (b).
SECTION 7. UNIFORM CHANGES IN PAR VALUES
Notwithstanding the provisions of Section 5 (b) of this Article, the Fund by a majority of the total voting power may make uniform proportionate changes in the par values of the currencies of all members, provided each such change is approved by every member which has ten percent or more of the total of the quotas. The par value of a member's currency shall, however, not be changed under this provision if, within seventy-two hours of the Fund's action, the member informs the Fund that it does not wish the par value of its currency to be changed by such action.