I happened to be reading the Articles of Agreement of the IMF because of something else I was interested in. As I mentioned before, Article IV is the one which demonstrates the change in the role of the IMF after about 1969, and it is worth quoting Secion 1 of this article in full
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Section 1. General obligations of members
Recognizing that the essential purpose of the international monetary system is to provide a framework that facilitates the exchange of goods, services, and capital among countries, and that sustains sound economic growth, and that a principal objective is the continuing development of the orderly underlying conditions that are necessary for financial and economic stability, each member undertakes to collaborate with the Fund and other members to assure orderly exchange arrangements and to promote a stable system of exchange rates. In particular, each member shall:
(i) endeavor to direct its economic and financial policies toward the objective of fostering orderly economic growth with reasonable price stability, with due regard to its circumstances;
(ii) seek to promote stability by fostering orderly underlying economic and financial conditions and a monetary system that does not tend to produce erratic disruptions;
(iii) avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members; and
(iv) follow exchange policies compatible with the undertakings under this Section
As already noted, there is no mention at all of unemployment here: well the article is about exchange rates so you may not think that is important. But the committment to the exchange of capital between countries as an unquestioned good is important.
It is interesting to see that in section 4 there is a firm committment to balanced budgets and that this does not just apply to those members who are in deficit: it specifically states that
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arrangements under which both members in surplus and members in deficit in their balances of payments take prompt, effective, and symmetrical action to achieve adjustment,
As I read that it would appear that Germany is in breach of these obligations, since it is my understanding that Germany is runnning a balance of payments surplus. It was certainly doing so in 2011
www.bundesbank.de/Redaktion/EN/Down...publicationFileThere have been calls for Germany to revalue or to take other steps to remedy this, since of course one nation's surplus is another nation's deficit and this is part of the problem for the eurozone. But, as with the nuclear proliferation treaty, the parts which place obligations on those who benefit do not seem to be implemented. In light of this section it seems to me that there should be significant measures to enforce those obligations and perhaps members of the IMF and the ECB should be put in to Germany to oversee its policies and ensure compliance with the terms of the agreement?
