For the first time in history, international monetary relations after World War II were institutionalized as a series of legal commitments. The articles of the agreement, which formed the International Monetary Fund, contain international legal obligations of the rules of good conduct for IMF members. Members were required to maintain a face value for their currency (until 1977), to use a single exchange rate system and to keep their performance accounts free from restrictions. In this article, I understand why governments are committed to these rules and the conditions under which they have fulfilled their obligations. Evidence indicates that governments have tended to make commitments and meet them if other countries in their region do the same. Governments also fulfilled their international legal commitments when the rule of law regime gave an important place to the rule of law on the national territory. One of the conclusions is that reputational problems are very much related to international legal obligations and compliance with these obligations. Countries that have invested in a good reputation to protect property rights are rather reluctant to be jeopardized by violations of international law. However, violations are more likely due to widespread non-compliance, indicating that compliance behaviour should be understood in its regional context. 7. When an amendment is proposed, the Fund approves or contradicts the proposed face value within a reasonable period of time after receiving the proposal.
The Fund agrees when it is convinced that change is necessary to correct or prevent a fundamental imbalance. The Fund must not object to the internal social or political policy of the member proposing the amendment. A proposed change in face value will not come into effect for the purposes of this agreement if the Fund opposes it. If a member changes the face value of his currency despite the Fund`s objection, the member is subject to Article XXVI, Section 2. Maintaining an unrealistic face value by a member is deterred by the Fund. 6. A member does not propose a change in the face value of its currency unless a fundamental imbalance is corrected or avoided. An amendment can only be made at the suggestion of the Member and after consultation with the Fund. 27. Executive Council decision, guidelines and larger margins: a temporary regime, 18 December 1971. See Dam 1982, 191.
The board attempted to bring the Smithsonian Agreement into compliance with the articles. The decision states that the temporary agreement “would allow members to meet, as far as possible, IMF objectives during the temporary period prior to the resumption of actual nominal values, with reasonable margins, in accordance with the articles.” But in 1979, 559.