Unauthorized Changes of Par Value and Fluctuating Exchange Rates in the Bretton Woods System

Abstract

In these days when the exchange rate provisions of the Articles of Agreement of the International Monetary Fund are being scrutinized, although in a spirit of continued approbation of the basic principles of what is called the par-value system or the Bretton Woods system, it may be useful to examine one of the most remarkable features of the agreement which was reached in July, 1944. The reference is to Article IV, Section 6, of the Articles of Agreement, which deals with what are called, in the title of the provision, "unauthorized changes" of par values. The provision is interesting not only because it establishes an important principle of the par-value system but also because it does this by means of a novel and ingenious legal technique.