Foreign exchange reserves

“ In the meantime, our exports are zooming up at double-digit rates, our balance of current accounts are in surplus, and our gross international reserves are at all-time highs, currently amounting to $14 billion. ”

“ More than 80 per cent of imports last year were capital goods and raw materials. Only the balance of 20 per cent went to consumer goods. The increase in export production and the modified import pattern reflected an overall economic gain for the country in foreign trade.
As we can see, our foreign exchange earnings have not kept pace with the rising internal demand for imports. The gap had to be financed from our international reserve so that our development program would not be paralyzed at its crucial first stages. ”

“ The international values will so adjust themselves that, either by greater exports or smaller imports, or both, the requisite excess on the side of exports will be brought about, and this excess will become the permanent state. The result is, that a country which makes regular payments to foreign countries, besides losing what it pays, loses also something more, by the less advantageous terms on which it is forced to exchange its productions for foreign commodities. ”

“ From the maturities, refunding operations, and interest remittances alone, growing out of the permanent investment of foreign money in our securities, there results a very great amount of international security and exchange business. Whether Europe's investment here amounts to three billions or four billions or five billions, it is impossible to say ”

“ Whatever persons—one bank or many banks—in any country hold the banking reserve of that country, ought at the very beginning of an unfavourable foreign exchange at once to raise the rate of interest, so as to prevent their reserve from being diminished farther, and so as to replenish it by imports of bullion. ”

“ If we will not exchange the surplus of our industry for the surplus of their industry, we render it as impossible for foreign nations to take our surplus, as it would be for us to take theirs, without such an exchange. Money alone cannot sustain a commerce between two nations, even if both had gold and silver mines. To give money for money would be no commerce at all. Mechanical and agricultural commodities constitute the basis of exchanges, and these exchanges constitute the essence of commerce. ”

“ Full decontrol may obviously be accompanied by an increase in price of imports, but it will create conditions favorable for the establishment of new industries to increase production for export and employment and, in the long run, stabilize prices. With the savings of foreign exchange resulting from the reduction of imports of consumer goods, we shall have more resources available for the importation of machineries and equipment to expand industrial production. ”

“ Financial control over all export transactions is maintained through the licensing system and through implementation of existing exchange-control regulations.
Strict bilateral trade agreements with almost all members of the Soviet bloc have constituted, in effect, a financial ceiling on exports to Eastern Europe. ”

“ Prestige, however, means credit, and this circumstance makes me believe that all these anxious discussions of the foreign exchange question and of the need for controlling German payments abroad are just as superfluous as the Government control of our economic activities during the period of transition.
“The nations now at war will be impoverished after the war, and the state of our exchange and the high prices of raw material will compel us to live from hand to mouth as far as the importation of raw material is concerned. ”

“ In the economic sphere, one of these is agreed to be the rate of exchange at which the currency of belligerent countries can be negotiated in neutral centres. One may thus employ this criterion to the financial position of Germany without risking any serious economic blunder. The criterion of foreign exchange is the one best applied to the credit of a belligerent country because experience has shown that, internally, the difficulties of war finance can fairly easily be met. ”

“ The gold-exchange standard would probably enable the country to get along with a smaller gold reserve than will the system to be adopted, inasmuch as it would keep gold coins out of circulation and the demands upon it would be limited to the requirements of meeting foreign trade balances—the only monetary use to which the dollars could not be applied. ”

“ Where it is recognized as necessary for maintaining stability in the foreign exchange market and soundness of foreign exchange agencies, the Minister of Strategy and Finance may impose necessary restrictions on the raising and operation of foreign currency, such as determining the asset-liability ratio of foreign currency of foreign exchange agencies. ”

“ Times come, of course, like the year of the Baltimore fire, when losses by these foreign companies greatly outbalance premiums received, the business they do thus resulting in the actual creation of great amounts of foreign exchange, but in the long run—year in, year out—the remitting abroad of the premiums earned means a steady demand for exchange. ”

“ It cannot be denied, that when a heavy balance is due by a nation, it has the effect of raising exchange upon every draught or remittance. When bills are demanded to pay a foreign claim, it cannot be determined from what cause the claim has arisen. Whether for national purposes or not, the exchange is the same, and equally affects the whole interest of trade. ”

“ For the purpose of arriving at a figure it is of no great consequence whether payment takes the form of cash (or rather of foreign exchange) or is partly effected in kind (coal, dyes, timber, etc.) , as contemplated by the Treaty. In any event, it is only by the export of specific commodities that Germany can pay, and the method of turning the value of these exports to account for Reparation purposes is, comparatively, a matter of detail. We shall lose ourselves in mere hypothesis unless we return in some degree to first principles, and, whenever we can, to such statistics as there are. ”

“ So that before the States can commence to talk about exchanging a dollar's worth of their own products for a dollar's worth of foreign products, they have to pay over to Europe, in money or in kind, no less a sum than 40 millions sterling!
No wonder their exports exceed their imports! What ignorance, what folly, does it not betray, therefore, to build up an argument in favour of Protection, and against Free Trade, on the bare figures which appear in trade returns! ”

“ First of all, cross-border payment involves various complicated issues such as monetary sovereignty, foreign exchange policies and arrangements, as well as regulatory and compliance requirements. It is also a challenge that the international community is committed to address. The internationalization of a currency is a natural result of market selection. The international status of a country's currency depends on its economic fundamentals and the depth, efficiency and openness of its financial markets. ”

“ We must try to get the optimum advantage out of our limited foreign exchange resources by funnelling them to these industries that can contribute most to our national income. Overcrowding in many industries needing imported capital equipment, investing in many lines of production not basic to our development, and importation of non-essential consumption goods are unnecessary drains on our foreign exchange. We should bring existing industries to their efficient productive capacity before going ahead with any but the most necessary new ventures. ”

“ The first is, that the imports have exceeded the exports, by about seventeen millions of dollars. Whatever may be the qualifications to which the theory of the balance of trade may be liable, it may be safely affirmed, that when the aggregate of the importations from all foreign countries exceeds the aggregate of the exportations to all foreign countries, considerably, the unfavorable balance must be made up by a remittance of the precious metals to some extent. Accordingly we find the existence of the other fact to which I allude, the high price of bills of exchange on England. ”

“ We would depart from that scheme if we read § 522 (c) as saying that on a given date only one buying rate for a specified foreign currency could be certified by the Federal Reserve Bank of New York or proclaimed by the Secretary of the Treasury. Dual or multiple exchange rates have resulted in recent years from measures for the control and restriction of foreign exchange and export transactions. [3] In the present case the British Government fixed the 'official' rate for the purchase of specified commodities for export. One who purchased woolens for export need not acquire pounds at that rate. ”

“ Each year there comes due in this country an amount of railroad and other bonds running well up into the hundreds of millions, of which a large proportion are held on the other side. Some of these maturities are paid off in cash—‌more often, refunding bonds are offered in exchange; seldom, indeed, are the maturing investments allowed to remain unreplaced. European investors, especially, have consistently done well with money placed in this country, and the running off to maturity of a foreign-held American bond is nearly sure to be followed up by replacement with some other American security. ”

“ If it be found that supplies limited by the order will not adequately meet legitimate and justifiable demand the satisfaction of which will serve the national interest, increased quotas will be author­ized. But the fundamental objective of conserving the foreign exchange resources so that they may be available for economic development and of giving impetus to domestic production will loom large in the consideration of questions involving the relaxation of these controls. Our means and our remedies will be productive rather than speculative or merely restrictive. ”

“ In the attainment of these targets, large amounts of both investible resources and foreign exchange were expected to be needed; and foreign exchange was thought harder to obtain. Domestic savings were expected to fall short of investment requirements by a total of P2.4 billion over the four years of the program; but the shortage of foreign exchange earnings as compared to import requirements was projected at P3.3 billion. A high priority was therefore attached to the expansion and diversification of our exports. ”

“ But as matter of comprehensive Economics, in which not only bankers and exporters but also all the other Wealth-producers of a country are concerned, it cannot be true that a perpetual credit balance of international trade is a favorable balance. In international trading, as in trading between individuals (which, by the way, international trading in the last analysis is) , the aggregate of exports and of imports must counter-balance. Otherwise the producers of the exports, considered as a whole, must be engaged in foreign trade at a loss. They give more Value than they get. ”

“ In addition to these items, which by enquiry could possibly be ascertained, there are the transactions of private firms who may transfer capital from one country to another, and about these no information can ever be obtained. The only outward indication we can have whether there is an undue excess of imports must be in the foreign exchanges, and if these are constantly adverse, without special reasons, and the value of money were to become permanently higher here than in other centres, then there would be reason to fear that our invisible exports are not sufficient. ”

“ One of the principal fears of business in the decontrol of foreign exchange is the loss of the protection which exchange controls provided to domestic industry against un­due external domination. There is no valid ground for this fear. As the exchange control machinery is dismantled, the alternative means of achieving the legitimate ends of controls shall be instituted. ”

“ In the first place, imported commodities are beyond the purchasing power of the great mass of the population, [4] and the flood of imports which might have been expected to succeed the raising of the blockade was not in fact commercially possible. [5] In the second place, it is a hazardous enterprise for a merchant or a manufacturer to purchase with a foreign credit material for which, when he has imported it or manufactured it, he will receive mark currency of a quite uncertain and possibly unrealisable value. ”

“ An unwarrantably rigid denied at the Secretary of the determination of an exchange rate which in substance corresponds to the realties of international exchange may force him to exercise the penalizing power of imposing countervailing duties. Finally, foreign exchange rates affect the fruitful use of foreign trade agreements. ”

“ In other words, these nations are creditor, or money-lending, communities. The imports of all money-lending coun [Pg 889] tries, like France, England, Germany, the Netherlands, and others, considerably exceed the exports, while the exports of all borrowing, developing, or unequally developed countries, like Russia, the United States, Argentina, Rumania, and many others, exceed the imports, as the foreign investor must be paid his interest, and the only source of money for such payment is eventually either the product of the soil or of industry. ”

“ It is desirable to effect full decontrol by providing a substi­tute for the 20 per cent retention of dollar export receipts by the Central Bank. Such step will pave the way of the early establishment of a fixed par value for the peso which will provide greater incentives to exports, facilitate long-range plan­ning and greater inflow of foreign investment. ”