This paper reviews the Fund’s policy on multiple currency practices (MCPs). There remain strong economic and legal reasons to retain a policy on MCPs. The over-arching aim of the review is to make the policy and its application more effective. Based on this review, the paper proposes initial considerations for reforming features of the policy that have created challenges. • Clarifying the concept of “official action” to focus on measures that segment FX markets. • Eliminating potentiality. • Updating the threshold for permissible FX spreads. • Adjusting approval policies. • Reviewing links with capital transactions. • Considering merits of a remedial framework.

In February 2019, the Executive Board considered staff’s preliminary proposals for reforming the IMF’s policy on multiple currency practices (MCPs) and supported the majority of the proposals. The Board expressed strong support for re-focusing the policy on official action that segments foreign exchange markets, eliminating the concept of potentiality, and replacing the current fixed two-percent rule for identifying MCPs for spot transactions with a country-specific market-based norm and tolerance margin that would apply uniformly across the membership for both spot and non-spot transactions. The Board also supported staff’s proposals regarding the other elements of the new methodology to identify MCPs, the treatment of illegal parallel markets, excluding broken cross-rates from the scope of the policy, and the linkages with the Institutional View on the Liberalization and Management of Capital Flows. The paper outlines operational considerations to address noncompliance and to ensure a smooth transition. It is proposed to enhance the current cooperative approach to addressing noncompliance by increasing transparency and accountability.

This note provides operational guidance to staff on the implementation of the new Fund’s policy on multiple currency practices (MCPs), effective February 1, 2024. The MCP policy is a key element of the Fund’s jurisdiction on exchange rates. The Fund’s Articles of Agreement prohibit member countries from engaging or permitting their fiscal agencies (as defined in the Articles) to engage in MCPs unless authorized under the Articles or approved by the Fund. The comprehensive review of the policy in 2022 aimed to reflect developments in FX policy and FX markets since the last policy review in the 1980s and to align it with other relevant Fund’s policies. Key changes to the policy include the following: (i) an MCP will arise due to an official action that segments foreign exchange (FX) markets or increases or subsidizes the cost of certain FX transactions (e.g., exchange taxes) and the resulting exchange rate spreads exceed the permissible margins, (ii) MCPs will be identified on the basis of a new country-specific market-based rule, and (iii) the new policy ensures better alignment of the MCP policy with other relevant IMF’s policies. The note provides guidance to staff on all stages of the process: from identification of an MCP to its approval or removal and clarifies the treatment of MCPs in surveillance and Fund-supported programs. It also guides staff’s engagement with the authorities on MCP issues and their coverage in country documents.

In July 2022, the Executive Board concluded the review of the Fund’s policy on multiple currency practices (MCPs). The effectiveness date for the new policy was originally envisaged for April 1, 2023 and then delayed to November 1, 2023. Staff proposed and the Board supported an additional extension of the transitional period and a delay of the effectiveness date to February 1, 2024. The extension will allow more time for the authorities to adjust to the new policy and for staff to conduct outreach with stakeholders to raise awareness. Elements of the revised policy which became effective immediately on July 1, 2022 will continue to apply as envisaged during the transitional period.

Executive Directors welcomed the opportunity to complete the review of the Fund’s Policy on Multiple Currency Practices (MCPs). They observed that MCPs can be distortionary, create unfair competitive advantage among countries, and hamper trade and investment, particularly over the medium and long term. They agreed that the MCP policy should remain a cornerstone of the Fund’s legal and policy framework to ensure orderly exchange arrangements and a stable system of exchange rates. They welcomed the adjustments to the policy to reflect developments since the last review in the 1980s so that it does not discourage good practices in FX markets and is better aligned with the Fund’s other policies (including the policy on exchange restrictions and the Institutional View on the Liberalization and Management of Capital Flows (IV)), while ensuring that it continues to address policy actions that are considered impermissible under the new policy.

This is the 64th issue of the AREAER. It provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls of all IMF member countries. It also provides information on the operation of foreign exchange markets and controls on international trade. It describes controls on capital transactions and measures implemented in the financial sector, including prudential measures. In addition, it reports on exchange measures imposed by member countries for security reasons. A single table provides a snapshot of the exchange and trade systems of all IMF member countries. The Overview describes in detail how the general trend toward foreign exchange liberalization continued during 2012, alongside a strengthening of the financial sector regulatory framework. The AREAER is available in several formats. The Overview in print and online, and the detailed information for each of the 191 member countries and territories is included on a CD that accompanies the printed Overview and in an online database, AREAER Online. In addition to the information on the exchange and trade system of IMF member countries in 2012, AREAER Online contains historical data published in previous issues of the AREAER. It is searchable by year, country, and category of measure and allows cross country comparisons for time series.

This is the 65th issue of the AREAER. It provides a description of the foreign exchange arrangements, exchange and trade systems, and capital controls of all IMF member countries. It also provides information on the operation of foreign exchange markets and controls on international trade. It describes controls on capital transactions and measures implemented in the financial sector, including prudential measures. In addition, it reports on exchange measures imposed by member countries for security reasons. A single table provides a snapshot of the exchange and trade systems of all IMF member countries. The Overview describes in detail how the general trend toward foreign exchange liberalization continued during 2013, alongside a strengthening of the financial sector regulatory framework. A Special Topic essay examines the dynamics and evolution of capital flows. The AREAER is available in several formats. The Overview in print and online, and the detailed information for each of the 191 member countries and territories is included on a CD that accompanies the printed Overview and in an online database, AREAER Online. In addition to the information on the exchange and trade system of IMF member countries in 2013, AREAER Online contains historical data published in previous issues of the AREAER. It is searchable by year, country, and category of measure and allows cross country comparisons for time series.

New technologies are driving transformational changes in the global financial system. Virtual currencies (VCs) and the underlying distributed ledger systems are among these. VCs offer many potential benefits, but also considerable risks. VCs could raise efficiency and in the long run strengthen financial inclusion. At the same time, VCs could be potential vehicles for money laundering, terrorist financing, tax evasion and fraud. While risks to the conduct of monetary policy seem less likely to arise at this stage given the very small scale of VCs, risks to financial stability may eventually emerge as the new technologies become more widely used. National authorities have begun to address these challenges and will need to calibrate regulation in a manner that appropriately addresses the risks without stifling innovation. As experience is gained, international standards and best practices could be considered to provide guidance on the most appropriate regulatory responses in different fields, thereby promoting harmonization and cooperation across jurisdictions.

This volume is the Forty-Third Issue of Selected Decisions and Selected Documents of the International Monetary Fund. It includes decisions, interpretations, and resolutions of the Executive Board and the Board of Governors of the International Monetary Fund, as well as selected documents, to which frequent reference is made in the current activities of the Fund. In addition, it includes certain documents relating to the Fund, the United Nations, and other international organizations.

This paper reviews key findings of the IMF’s Annual Report for the fiscal year ended April 1948. The report highlights that during 1947 and in the early part of 1948, considerable progress was made in strengthening the economies that suffered devastation and dislocation as a result of the war. Over the world, generally production rose and recovery continued, despite widespread political tension and conflict, and disturbances. In nearly all countries, however, the need and demand for goods continued to be abnormally great, and there were increasing difficulties in meeting international payments for import surpluses.