Two British Initiatives for IMF Lending to its Members, 1960–1962
Jacques J. Polak
Published: March 2006
This paper describes the origin, evolution, and results of two initiatives taken by the United Kingdom in the early 1960s. Both initiatives aimed at facilitating large-scale lending by the IMF (or in close parallel to the IMF), primarily in support of the two reserve currencies of the international monetary system, the US dollar and sterling. The first initiative—of which there appears to be no previous record extant anywhere—achieved its objective, leading to three important changes in IMF policy, including the General Arrangements to Borrow (GAB). The design of the second practically ensured its failure to win international support; but it provoked the United States into proposing a powerful study group on international liquidity which, seven years later, resulted in the creation of the Special Drawing Right (SDR) facility in the IMF.