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42Nd Annual Report of the Bank for International Settlements

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42Nd Annual Report of the Bank for International Settlements BANK FOR INTERNATIONAL SETTLEMENTS FORTY-SECOND ANNUAL REPORT 1st APRIL 1971 - 31st MARCH 1972 BASLE 12th June 1972 TABLE OF CONTENTS Page Introduction i I. The Crisis of the Dollar and the Monetary System 3 The US balance of payments (p. ß) ; US measures to limit the deficit (p. 11) ; the balance of surpluses and deficits (p. iß); the growing disequilibrium of the system (p. 16); prelude to 15 th August 1971 (p. 2ß); floating exchange rates (p. 27); the Smithsonian agreement (p. 29); post-Smithsonian developments (p. ßo) II. Survey of Economic and Monetary Developments and Policies 34 The domestic economic scene (p. ß4); money, credit and capital markets (p. ß8); developments and policies in individual countries: United States (p. 4;), Canada (p. 49), Japan (p. JI), United Kingdom (p. jß), Germany (p. JJ), France (p. 60), Italy (p. 6ß), Belgium (p. 6j), Netherlands (p. 66), Switzerland (p. 68), Austria (p. 69), Denmark (p. 70), Norway (p. 71), Sweden (p. 72), Finland (p. 74), Spain (p. 7j), Portugal (p. 76), Yugo- slavia (p. 77), Australia (p. 78), South Africa (p. 79); eastern Europe: Soviet Union (p. 80), German Democratic Republic (p. 80), Poland (p. 80), Chechoslovakia (p. 81), Hungary (p. 81), Rumania (p. 82), Bulgaria (p. 82) III. World Trade and Payments 83 International trade (p. 8ß); balances of payments (p. 8j): United States (p. 87), Canada (p. 89), Japan (p. 91), United Kingdom (p. 9ß), Germany (p. 94), France (p. 96), Italy (p. 98), Belgium-Luxemburg Economic Union (p. 100), Netherlands (p. ioi), Switzerland (p. 102), Austria (p. 104), Denmark (p. IOJ), Norway (p. 10;), Sweden (p. 106), Finland (p. 107), Spain (p. 108) IV. Gold, Reserves and Foreign Exchange . 109 Gold production, markets and reserves (p. 109); the expansion of global reserves (p. 114); monetary movements: United States (p. 116), United Kingdom (p. 118), Germany (p. 120), France (p. 121), Italy (p. 122), Netherlands (p. I2ß), Belgium-Luxemburg Economic Union (p. 12j), Switzerland (p. 12j), Austria (p. 126), Sweden (p. 126), Norway (p. 127), Denmark (p. 127), Finland (p. 127), Spain (p. 127), Portugal (p. 128), other European countries (p. 128), Japan (p. 128), Canada (p. 128); International Monetary Fund (p. 129); foreign exchange markets (p. ißi); exchange-market arrangements amongst members of the European Economic Community (p. ißi), sterling (p. iß2), Deutsche Mark (p. ißß), guilder (p. iß;), Belgian franc (p. iß6), French franc (p. iß6), Swiss franc (p. iß7), lira (p. iß8), schilling (p. iß8),yen (p. iß8), Canadian dollar (p. iß8), other currencies (p. iß9); other exchange developments (p. 140) Page V. The Euro-Currency Market . ... '. 148 General developments (p. 148); the Euro-currency market during the currency crises (p. 1 jo); the.composition of the changes (p. ijß); sources and uses (p. 1J4); individual reporting countries (p. ij8); interest rate developments (p. 162) VI. The European Monetary Agreement . 165 Review of the Agreement (p. I6J); operations under the Agreement: European Fund (p. 16j), Multilateral System of Settlements (p. 167); Statement of Account (p. 169); management of the European Monetary Agreement (p. IJI) VII. Activities of the Bank . 172 Development of co-operation between central banks and international organisations (p. 172); operations of the Banking Department (p. 172): liabilities (composition of resources) (p. 174), assets (employment of resources) (p., 179); the Bank as Trustee for international government loans (p. 182); the Bank as Depositary under the terms of the Act of Pledge concluded with the European Coal and Steel Community (p. 184); the Bank as Agent for the OECD (European Monetary Agreement) (p. 184); net profits and their distribution (p. /<?./,),• changes in the Board of Directors and in the Management (p. 186) Conclusion 188 * * Balance Sheet and Profit arid Loss Account as at 31st March 1972. LIST OF TABLES AND GRAPHS (Graphs are indicated by an asterisk) Page I. The Crisis of the Dollar and the Monetary System United States: . Balance of payments, 1950-71 j ......... 4 Gross national product and merchandise imports * 6 Ratio of merchandise imports to related domestic indicators 7 Changes in relative cost and price position, 1961-71 8 Official reserve movements (including SDRs), 1950-71 14 Changes in official monetary gold stocks 17 Supply of gold and net western official purchases * 18 Changes in global reserves, 1955-69 21 Realignment of leading currencies, 5 th May-i 8th December 1971 30 Selected currencies : Spot quotations for the US dollar * . ..31 II. Survey of Economic and Monetary Developments and Policies Changes in real output, wages and prices * 35 Production, prices and wages* 37 Supply and use .of resources . 39 The banking system: Monetary survey 41 Short and long-term interest rates * 43 Changes in official discount rates since 1970 44 United States: Total net funds raised in the credit and equity markets 46 Saving, investment and changes in financial assets and liabilities 48 Canada : Total net funds raised on credit and equity markets 50 Japan : Changes in financial assets and liabilities 52 United Kingdom: Saying, investment and changes in financial assets and liabilities 55 Domestic credit expansion . 56 Germany: Saving, investment and changes in financial assets and liabilities 59 France: Changes in reserve requirements 61 Italy : Saving, investment and changes in financial assets and liabilities ....... 64 Sweden: Net credit flows 73 Eastern European economies : Sectoral output and national income produced .... 81 III. World Trade and Payments International trade 83 Growth of exports from main industrial areas 84 Page Balances of payments : Group of Ten countries 86 United States ' 88 Canada 90 Japan 92 United Kingdom 93 Germany 95 France 97/98 Italy 99 Belgium-Luxemburg Economic Union 100 Netherlands 102 Switzerland 103 Austria 104 Northern countries . '.'.... 1 106 Spain 108 IV. Gold, Reserves and Foreign Exchange World gold production 109 Estimated sources and uses of gold no Gold market prices * 111 World gold reserves 113 Changes in global reserves 115 External monetary movements: United States 117 United Kingdom , . .• 119 Germany 121 France 122 Continental European countries, Canada and Japan 124 International Monetary Fund: Drawings and repurchases in 1971 . 130 Quotations for the US dollar: Yen, Deutsche Mark, schilling, Swiss franc, sterling, French franc * ....... 134 Belgian franc, guilder, lira, Swedish krona * 135 V. The Euro-Currency Market External liabilities in foreign currencies of banks of eight reporting European countries* 148 External positions of reporting European banks in dollars and other foreign currencies 151 Estimated size of the Euro-currency market 155 Foreign currency positions of reporting European banks vis-à-vis non-residents ... 156 External liabilities and assets of banks in individual reporting countries in domestic and foreign currencies . 160 External liabilities and assets of banks in individual reporting countries in dollars and other foreign currencies 161 Three-month interest rates in national markets and the Euro-market * 163 VI. The European Monetary Agreement European Fund : Utilisation of credits granted * . 166 Statement of Account 170 Page VIL Activities of the Bank Annual balance-sheet totals 173 Memorandum accounts 174 Liabilities * 174 Composition of resources 177 Borrowed funds : by origin . 177 by nature and term 178 Assets * 179 Sight assets and other investments 180 Time deposits and advances and securities at term 181 German External Loan 1924 (Öawes Loan) 183 German Government International Loan 1930 (Young Loan) 183 Austrian Government International Loan 1930 184 Secured loans of the European Coal and Steel Community 185 FORTY-SECOND ANNUAL REPORT submitted to the ANNUAL GENERAL MEETING of the BANK FOR INTERNATIONAL SETTLEMENTS held in Basle on 12th June 1972 Gentlemen, I have the honour to submit herewith the forty-second Annual Report of the Bank for International Settlements for the financial year which began on ist April 1971 and ended on 31st March 1972. In the course of the financial year an issue to central banks of a further 16,400 shares was made, thereby raising to 481,125 the total number of shares issued and paid up to the extent of 2 5 per cent. Details of this small change in the capital structure of the Bank can be found in Chapter VII of this Report. After deduction of the transfer of 7,531,416 gold francs to the Provision for Exceptional Costs of Administration, the net profit for the year amounted to 148,832,656 gold francs, compared with 99,448,906 gold francs for the preceding year. The Board of Directors recommends that, in application of Article 51 of the Bank's Statutes, the present General Meeting should allocate the sum of 17,888,437 gold francs in payment of the preferential dividend of 6 per cent, per annum, or 37.50 gold francs per share, and that from the remainder of the net profit it should appropriate 8,944,219 gold francs — a sum falling within the statutory limit of 20 per cent. — in payment of the maximum further dividend of 3 per cent, per annum, or 18.75 gold francs per share. These dividends are payable in respect of the full year in the case of 464,725 shares and in respect of nine months in the case of the 16,400 shares issued at the end of June 1971. The Board further recommends that 61,000,000 gold francs be transferred to the General Reserve Fund, 24,400,000 gold francs to the Special Dividend Reserve Fund and 36,600,000 gold francs to the Free Reserve Fund. If these proposals are approved, the Bank's total dividend for the financial year 1971-72 will amount to 56.25 gold francs per share on 464,725 shares and to 42.1875 gold francs per share on the 16,400 shares issued in June 1971. The sums in question are payable to shareholders on ist July 1972 in Swiss francs and amount, on the basis of the central rate at present in force, to 76.60 and 57.45 Swiss francs per share respectively.
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