The International Monetary Fund's policy-making committee authorized yesterday a study of a "substitution account" with a report to be made at the IMF's annual meeting next September in Belgrade, Yugoslavia.
A substitution account would allow countries holding what they believe to be excess amounts of dollars to exchange them at the IMF for special drawing rights (SDRs). SDRs are a special monetary unit created by the IMF for its members.
The decision to go ahead with a serious study of a substitution account was a triumph for those countries that believe it is a step necessary for strengthening the U.S. dollar.
But a communique issued last night said the purpose "would be to take a further step toward making the SDR the principal reserve asset in the international monetary system."
This is in deference to the position of the United States, which has been willing to go along with a study of the long-debated substitution account idea, provided that it was an effort to enhance the prestige of the SDR, and wasn't considered a dollar-propping measure.
Interim Committee Chairman Denis Healey said that "we have never gotten this far" with the substitution idea, which was vigorously opposed by some nations notably the U.S., at the Interim Committee meeting in Mexico City in the spring of 1978.
"Many changes have taken place since them," Healey said. He didn't elaborate, but a severe decline in the dollar accelerated last year, especially after the Bonn summit in July.
One variation of the old substitution account theme was a proposal originated by IMF Managing Director Jacques de Larosiere which would place the substitution account on a voluntary basis. Foreign exchange would be turned into the IMF not for SDR themselves, but for an "SDR denominated claim." The foreign exchange offered for the new assets would not be related to IMF quotas, Larosiere said.
Both Larosiere and Healey stressed that the technical details were still vague. "Nobody expressed doubt about (the Larosiere concept, but nobody endorsed it until they know how it works," Healey said.
The Interim Committee is composed of leading finance ministers and central bankers, who were joined for the first time yesterday by Abdul Aziz Al-Quraishi, governor of the Saudi Arabian Monetary Agency, who took the Saudi Arabian seat voted that country at the last annual meeting.
As part of a general discussion of the world economic outlook, Al-Quraishi -- according to Healey -- "made an impressive defense of (the need for) an increase in oil prices" supported by Rene G. Ortiz, secretary general of the Organization of Petroleum Exporting Countries, who sat in among observers from other international agencies.
But the committee as a whole expressed concern about "the potentially unfavorable impact on many member countries of the recent emergence of uncertainties relating to the supply and price of oil."
Healey said that the new oil problim and the acceleration of inflation had forced the committee "to shade down somewhat" the estimates of future world economic growth. Specreal growth forecast was kept about ifically, although this year's overall 3.7 percent, the 1980 prospect was shaved from 4.5 to 4 1/4 percent.
But these figures appear to reflect a projection that Iranian oil output would return to normal at the end of the year, and did not stitch in oil price rises beyond the 10 to 14.5 percent range originally set by OPEC for this year.
Meanwhile, Japanese central bank Chairman Teiichiro Marinaga -- who said flatly at a press conference that "the basic reason for discussion of a substitution account is to strengthen the dollar" -- told the Interim Committee that Japan could not stimulate its economy further without risking a new and serious inflation.
But Healey told reporters that the worsening prospects for the non-oil- developing countries, who face a combined current account deficit of $38 billion this year, make it even more imperative for countries such as West Germany and Japan to reduce their surpluses.