Burden-Sharing and Loosened Conditionality, 1974–75: ‘The Nature of What Constitutes a Sustainable Balance of Payments has been Radically Changed’

Abstract

Benjamin Cohen (1983: 315–17) has argued that the major transformations that occurred in the international monetary system during the 1970s — floating exchange rates, the suspension of gold convertibility, the expansion of the role of private banking institutions for payments financing — were ‘norm-governed changes.’ With respect to the provision of official balance of payments financing, he identifies an international regime encompassing ‘the set of implicit or explicit principles, norms, rules, and decision-making procedures governing access to external credit for balance of payments purposes’ and argues that ‘no matter how profound the [balance of payments financing] regime’s recent change may appear, it does not in fact add up to a transformation in kind… At the level of principles and norms, the regime remains very much as it was’ (Cohen 1983: 317, 333). The penultimate principle of the regime — that countries should enjoy ‘adequate but not unlimited’ access to financing — remains intact, Cohen argues (1983: 323).

IMF Managing Director Johannes Witteveen (1974d: 129) in a May 1974 speech.