Economic and financial section > Commission of enquiry for European Union

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1. In suggesting the establishment of a Monetary Normalisation Fund, the Financial
Committee of the Stresa Conference did not contemplate the immediate operation of that
Fund. It stressed the necessity for the previous fulfilment of certain essential conditions, the
most important of which were the readjustment of the balance of payments of countries
which might have recourse to the Fund, the re-establishment on sound bases of their entire
national economy, the final restoration of budgetary equilibrium and the adjustment, so
far as might be necessary, of foreign debts by means of negotiations with the creditors. The
Financial Committee of the Stresa Conference suggested that, when all these conditions had
been fulfilled and “ the countries concerned had reached the threshold of a final adjustment
in regard both to internal relations and the relations of their own economic life with that
of the world at large ”, situations might arise in which foreign assistance in currency matters
would be found both necessary and effective for the purpose of abolishing exchange restrictions
and maintaining or restoring the legal stability of the currency. The Normalisation Fund
might thus begin to operate “ at the opportune moment ”. According to the report of the
Stresa Conference, “ it would not be called into play until the last stage and would, ^as it
were, form’ the coping-stone of the edifice raised by the interested parties themselves .. It
was also considered that, apart from its actual utilisation, this Fund would have a psychological
effect and would stimulate confidence.
We attach no less importance than the members of the Stresa Conference to a return
at the earliest possible moment to freedom in regard to exchange. We also share their views
as to the necessity of the countries concerned taking suitable internal measures.
2. During the Committee’s discussions, stress was laid on the importance of a rise in
the prices of raw materials and agricultural products. We consider that this rise is a
fundamental factor in the improvement of the situation. Moreover, it was in this spirit that
the Stresa Conference contemplated action for the revalorisation of cereals and other agricul¬
tural products. The problem of a general rise in prices is outside our terms of reference and
will doubtless be dealt with by the forthcoming International Economic Conference. However
we should like to express the following opinion : A rise in prices, particularly if accompanied
by a general economic recovery, would greatly facilitate the fulfilment of the preliminary
conditions required for the effective operation of the Fund.
3. The Committee wishes to emphasise the fact that the operation of the Fund constitutes
only one of the means which it would be possible or expedient to apply at a later date to ensure
the success of operations with a view to monetary recovery. In the past, operations of this
kind have been carried out with the help of credits granted by central banks or commercial
banks, long-term loans and in various other ways. The establishment a few years ago
of the Bank for International Settlements has introduced further facilities in this domain. In
view of the insecure position of monetary systems and of the fact that requests for assistance
may be made simultaneously by several countries, it is, however, unlikely that these various
methods, which will doubtless be called upon to play their part, will prove adequate.
4 It seems to us that one of the important aspects of the proposals made by the Stresa
Conference lies in the fact that international collaboration is regarded as essential for the
re-establishment of a normal monetary situation in Europe. The Stresa Conference suggested
a new formula for this collaboration ; we should like in the first place to emphasise the necessity
for an organised effort, on the part of all nations in the world, to emerge from the present
situation.
c It is difficult at the present time to foresee the situation which will arise when the
preliminary conditions for the operation of the Fund have been fulfilled ; it may well be, 1
general conditions improve, that the measure of assistance which might seem necessary m
the conditions of to-day may prove substantially less when the actual time arrives ; conse¬
quently the Committee did not consider it possible for the moment to undertake the detailed
and thorough preparation of the scheme from a technical point of view. On the other hand,
it feels able at present to indicate the main outlines—which are given below and to lay
down certain general principles for the future application of the Fund.
6. The Committee did not consider it possible to include in the Monetary Normalisation
Fund or to attach to this Fund, which is to consist essentially of a collection of credits, the
proceeds of the annual contributions which, according to the Report of the Stresa Conference,
might be assigned for the revalorisation of cereals. .... j 1 ^ •+:QC,
These two classes of assets must obviously be administered by different authorities.
There is it is true, a theoretical connection between the two schemes m that both involve
contributions by Governments with the final common aim of the economic restoration of
Europe and in this respect action to revalorise cereals would precede the application of t e
Monetary Fund. But it would appear that this theoretical connection can only affect the
discussions between Governments regarding the allocation of the contributions to be furmshe
possibly in different forms but with a common object. . .
For its part, the Committee has been obliged to confine itself, in drawing up the main
outlines of a Monetary Normalisation Fund Scheme, to the consideration of that Fund alone.