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Thursday, 2 November 1967

Mr Collard (KALGOORLIE, WESTERN AUSTRALIA) asked the Treasurer, upon notice:

1.   When did the Board of Governors of the International Monetary Fund last discuss seriously and at length a proposition for an increase in the price of gold?

2.   Which member countries supported the proposition?

3.   Which member countries actually spoke against it?

4.   When is the matter next likely to attract serious discussion?

Mr McMahon - The answers to the honourable member's questions are as follows:

1.   The possibility of an increase in the price of gold has been raised at most of the recent annual meetings of the Board of Governors of the International Monetary Fund including the last meeting in Rio de Janeiro in September 1967.

2.   The Governors of Australia and South Africa have frequently referred to the problems of gold at IMF meetings. My address at the Rio meeting contained the following statement:

On earlier occasions I have referred to the problem of gold. The Fund Annual Report indicates that official gold holdings fell slightly in the course of 1966. I do not think there can be any doubt that thefixed price for gold has had a depressing effect on gold production and on the proportion of gold output which finds its way into official reserves. I must repeat what 1 have said before that the time is overdue for a Fund study of the many aspects of gold production and the contribution it makes to world monetary reserves.

It may be argued that the new facility (special drawing rights on IMF) will reduce the need for gold. I cannot see it that way myself. Behind the special drawing rights facility stands the Fund and behind the Fund stand gold subscriptions. I still maintain therefore that it would be wrong of us to neglect the contribution of gold, which I believe will remain the foundation of our international payments system for a long time ahead.'

3.   Under the Articles of Agreement of the International Monetary Fund, an increase in the official price of gold would need the agreement not only of members holding a majority of the voting power but also of each member which has 10 per cent or more of the total of IMF quotas. This means that the consent of the United States and the United Kingdom would be necessary. However, the United States Government has repeatedly stated that it is firmly opposed to any change in the price of gold.

4.   The next occasion on which the price of gold is likely to be discussed will be at the 1968 Annual Meeting of the IMF.

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