Balance-of-payments financing: evolution of a regime

The regime for payments financing embedded in the postwar Bretton Woods system was based on the principle, formally articulated in the Charter of the International Monetary Fund (IMF), that nations should be assured of an adequate but not unlimited supply of supplementary financing for balance-of-payments purposes. Norms included the obligation to avoid policies inconsistent with the IMF Charter (i.e., to play by the agreed rules of the game). In the 1970s the regime seemingly underwent profound change, as the private credit markets emerged as an increasingly important rival to the IMF as a source of payments financing. Nonetheless, this change fell short of a transformation of kind, insofar as the Fund continues to play a role as informal certifier of creditworthiness in the markets. Rather, it represents an example of ‘norm-governed change.’ Despite greater ambiguity in rules and decision-making procedures, a strong element of continuity in basic principles and norms remains.