Treasury Secretary Donald T. Regan said today that he is fully prepared to recommend that the United States intervene in foreign exchange markets if a new study endorsed at the economic summit demonstrates that intervention smoothes currency fluctuations or removes irritants from the international monetary system.
"I'm keeping a definite open mind on it," Regan said just before returning to Washington.
"I'm not kidding on this one. In other words, a lot of people have said that we'll enter into the study with a closed mind, that we fully expect that the study will back us up, and therefore we won't change" U.S. policy. "That's never been my style, and it won't be my style in this one," he said.
Such an intervention policy would be in marked contrast to present Reagan administration practice, which is to shun intervention except in cases of so-called disorderly-market conditions. In actual practice, the Reagan administration has intervened on only one occasion--March 30, 1981, the day of the attempted assassination of the president.
Regan is known to feel that intervention is not normally a worthwhile process. He believes that exchange rates vary according to real economic conditions as reflected in the markets, and that artificial attempts to prop up a currency or otherwise to influence exchange rate relationships usually are futile and costly.
But at the summit just concluded here yesterday, and in long preliminary sessions, Regan has tried to put distance between his own posture on the subject and that of his principal aide on monetary affairs, Treasury Undersecretary Beryl Sprinkel.
Although the Treasury has issued no internal policy directives on this subject, Regan is known to have decided that anti-intervention rhetoric should be subdued until the study is completed. He appears to feel that the value of intervention should not be prejudged.
At the same time, Regan does not seem to want to risk signaling a change in current American intervention policy. But officials recognize there is a risk that Regan's willingness to say on the record that he has an "open mind" on intervention will be misinterpreted in France, where there is an almost desperate desire to return to a fixed relationship in exchange rates.
French officials floated stories throughout the past week that the United States would shift its intervention policy at the summit, espousing more active efforts to influence the rate of the dollar, at least along the lines of those that had been practiced by the Carter administration.
French Finance Minister Jacques Delors led French and other European reporters to believe that an actual American decision for more active intervention was about to be taken. Some high-ranking American officials believe that these tactics--which they refer to as desperate--can be explained only if France is going to go through another devaluation of the franc in the European Monetary System.
Meanwhile, the study of intervention will go forward under the direction of the finance ministers of the United States, France, West Germany, Great Britain and Japan with the intention of developing a framework for discussion at the International Monetary Fund meeting in Toronto at the beginning of September.
Curiously, the study is not directely mentioned in the summit declaration--a diplomatic omission designed to soothe the ruffled feelings of the Italians, Canadians and smaller European countries. It had been decided that for practical reasons the study would be made of the results of intervention in the currencies of the five major countriesonly.
But other countries, especially Italy, complained loudly enough about the "slights." Reference to the study then was stripped out of the declaration, and it was launched instead by a private codicil among the Big Five, who agreed that Italy, Canada and other countries will be asked to participate from time to time.