Y - Historische Gesellschaft der Deutschen Bank e.V.

Private notes in the year under review remained an important tneans for financing the
investinents of industry and public agencies.
Closer economic ties with foreign countries in the year under review benefited monetary
stability in the Federal Republic. The foreign trade volumc reachcd a total of LJM x 24 billion.
Thc surplus on foreign trade account amounted to DM 6. I billion. At this figure it was slightly
above thc rcsults achieved in I 963. Total imports rose by just under r 3 per cent, commercial
imports expanded by almost 17 per cent, whereas exports were more than I I per Cent above
the figure of the preceding year. Whilc thcrc was a forcign trade surplus, a deficit was registered
in sexvice transactions (DM 0.8 j billion), restitutions (nhr z. I billion) as wcll as payments to
intcrnational organizations, etc. Remittances effected by foreign workers to their home
countrics rcpresented a charge of more than uhr I billion. Long-term capital transactions (pur-
chases and/or sales of sccuritics, direct investment, etc.) on balance led to an outflow in the
equivalent of »M 1.1 billion. At DM 30.3 billion gold and currency reserves of the Bundes-
bank at the end of the year under review were recorded at the Same level as the year
before.
At present there are no indicatioris that West Germany will record a foreign trade surplus
in the futurc with a resulting increase in thc accrual of currency reserves. Many a supporter
of changes in thc rates of exchange of his own currcncy or thosc of other countrics in the first
half of 1964 has, as has become evident, misjudged facts. Surpluscs in onc country and deficits
in another in some cascs only proved to be the result of temporary disturbances.
Even if the restoration of a normal equilibrium in the balance of payments should take
some time, changes in the rates of exchange would not constitute a means compatible with an
intensive intexnalional exchange of goods, scrvices, and capital. This applies to both devalua-
tion and revaluation of individual currencies as wcll as to the intwoduction of freely fluctuating
exchange rates or flexible rates with ample allowancc for oscillation. It is most welcome that
the Federal Government explicitly acknowledged that fixed exchange rates constitute a factor
fostering integration while fluctuating rates would, besides other deficiencies, tempt nations
to go alone in monetary and tradc matters.
In the past two years, it has again become evident within the Common Market that
adherence to the prevailing exchange ratcs even in times of difiiculty may be conducive to
making thosc institutions and political forccs successful which are aiming at bringing about a
lasting equilibrium in the balance of payments. llisregarding a few possibly short-lived
successes, also theprescrvation of the internal stability of a currency should bccome increasingly
difficult because of the uncertainty and unsteadiness in the field OE foreign trade and payments
which would result from fluctuating exchange rates. Flexible exchange rates within the
Common Market would be apt to lcad to particularly grave disturbances in all member
countrics.
111 the past ycar it became once again evident that the present international monetary
system is workablc even if exposed to heavy strain. As long as fundamental prerequisites
conducive to achieving a stable development of the balances of payments awe missing, every
monetary order will have its deficiencies. No proof has been givcn so far that these can be
reduccd by substituting a new system for the present one. Tke contrary inight happen. Yet,
in the light of rcccnt experiences, the question seems to be gaining importance of how