A Possible Intra-European Payments Scheme

Abstract

THE General of the Committee of European Economic Co-operation (July-September, I947), which prepared the way for the European Recovery Programme, included a Report of the Committee of Financial Experts , in which transferability of European currencies was advocated. There followed the of the Committee on Payments Agreements (27th September, I947). The Committee of Experts had taken the view that transferability must ultimately rest on the principle that the amounts owed to a country in excess of the margins provided for by payments agreements should be convertible into gold or United States dollars . The Committee on Payments Agreements had before them a Benelux proposal for settling in gold or convertible currency the balances in excess of the credit margins laid down in the payments agreements to the extent that the surplus countries are entitled to ask for such a settlement (i.e., to make current payments to countries outside the group ). The subsequent sad history of the attempts to evolve a satisfactory scheme suggests that it might have been wise to learn to walk before any attempt was made to run. This article is aimed at a strictly limited objective. Its object is to discuss a particular proposal for an Intra-European Payments Scheme. While, so far as is known, the proposal has not been put forward in the precise form in which it is presented here, it bears a close family relationship to proposals which have been published2 and no serious claim for its originality is advanced. The discussion will be based on simplifying assumptions, some of them perhaps extreme and cavalier, but it is only in this way that it is possible to avoid the confusion which has attended the elaboration of the actual Payments Agreements for I948-49 and for I949-50. No serious attempt will be made here, except by implication, to appraise these actual Agreements, one reason being that it is still far from clear how they are intended to operate.3