World monetary reform and European integration (European economic problems)
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly debate on 17 and 18 October 1972 (8th and 9th Sitting) (see Doc. 3167, report of the Committee on Economic Affairs and Development). Text adopted by the Assembly on 18 October 1972 (9th Sitting).
The Assembly
1. Views with the gravest concern the pace of currency inflation in member countries of the Council of Europe and other democratic countries, indicated by the rapid rises taking place in living costs, in real estate and property prices, and in the free market price of gold ;
2. Observes that the depreciation of European currencies is not a purely monetary phenomenon, but now is partly a consequence of changes in attitudes to the distribution of wealth which are making the conventional remedies for inflation ineffective ;
3. Foresees that the economies of European countries must prepare to accept continuing heavy strain because of the need to satisfy the demand for rapidly rising living standards among their own people and in the developing countries with close trading and political associations with Europe ;
4. Considers that the end of the gold exchange standard for the regulation of parities and the other changes accompanying the final suspension of convertibility of the US dollar in August 1971 have also contributed to the world-wide propensity to inflation and increased the urgency of the proposals for European monetary reform ;
5. Notes that the current weakness and the rise in holdings of US dollars is a continuing source of instability and an embarrassment for monetary authorities in several member countries ; but also takes note of the confidence of the International Monetary Fund that the Smithsonian Agreements of December 1971 should contribute strongly to the correction of the balance of payments of the United States in 1973 and later years ;
6. Commends the endeavours of IMF to work out a new basis for a world monetary order capable of general acceptance, but recognises that progress towards this objective is unlikely to provide any early solutions to current monetary and economic problems in Europe or in developing countries ;
7. Warmly welcomes the measures now being taken by EEC countries to institute a European Fund for Monetary Co-operation ;
8. Considers that progress towards European integration will be of material assistance to developing countries and should help to prepare the way for the eventual re-negotiation of the Bretton Woods Agreements ;
9. Stresses that European economic integration is to be pursued for its inherent advantages and not as a method of insulating European countries from the other major economic areas of the world ;
10. Would deplore the introduction of restrictions on trade or non-speculative investment for the purpose of making Europe into an isolated currency bloc ;
11. Accepts that variations in parities will be unavoidable between world economic areas which have no political will to achieve the integration of their economic systems, but commends the agreement of EEC and prospective member countries to limit market fluctuations in the spot quotations for their currencies ;
12. Regrets the circumstances, including the withdrawal from London of funds equivalent to $ 2 500 million, which made it inevitable for sterling to revert to a floating rate in June 1972 ; and expresses the hope that sterling will be brought back to a fixed parity before the end of 1972 ;
13. Recognises that parities of member countries must continue to be subject to occasional adjustment until movements of short-term capital have been stabilised and economic integration is much further advanced ;
14. Recognises that changes in parities of currencies should be governed by specific conventions just as much as the variations in the permitted dealing margins, and calls on member countries to formulate a rational procedure for settling the timing and extent of parity changes ;
15. Recognises that progress towards economic integration requires parallel actions in political and monetary fields, and that monetary stability will be short-lived in the absence of deliberate measures to co-ordinate fiscal, budgetary, regional, social and company management policies and practice.
