ECONOMIC

TABLE 54.—Major changes in capital controls,1973—ContinuedCountryControls on banks and otherfinancial intermediariesControls on portfolioinvestmentControls on directinvestmentOctober25—relaxed requirementthat foreigners floatingyen loans must immediatelyconvert 90 percentof the proceeds into foreigncurrency.November 21—Governmentannounced that it wouldmake no further additionstc its dollar financing ofone-half of Japanese banks'import loans.December—marginal reserverequirement on free yendeposits by nonresidentslowered from 50 percentto 10 percent.November—banned residentpurchases of foreign bondswithin 6 months oftheir maturity; endedrequirement that securityhouses should balanceforeign purchases and salesof Japanese stocks.December—foreigners allowedto purchase Japanesebonds without restrictions.Netherlands.March to May — noninterestbearing reserve requirementlevied on increasesin banks' net foreign guilderliabilities; special commissionlevied against inincreasesin balances inconvertible guilder accounts.January—residents allowedto subscribe for new Euroguildernotes issued byresidents.Switzerland.January 29 to October 29—banks prohibited from havingnet liabilities in foreigncurrencies (spot and forwardtogether).October 1—National Bank revokedthe 2 percent perquarter negative interestrate on banks' franc depositliabilities to nonresidents.United States..May 16—Federal ReserveBoard (FRB) lowered reserverequirements againstEurodollar borrowings inexcess of the reserve freebase (from 20 to 8 percent),and took steps to eliminategradually the reserve freebases.December 26—Federal ReserveBoard announcedeffective Jan. 1, increasedforeign lending and investmentceilings for banks andother financial institutionssubject to the VoluntaryForeign Credit RestraintProgram: ceilings raised onforeign loans by U.S. banks,by U.S. agencies andbranches of foreign banks,and by U.S. nonbank financialinstitutions.January 1974—Controls onforeign lending by financialinstitutions suspended.April—Interest EqualizationTax(IET) extended throughJune 1974.December 26—Treasury Departmentannounced reductionof the IET from anannual rate of 94 to J4 percentper annum effectiveJan. 1,1974.January 1974—IET reducedto zero.Continued liberalization: exportcredits extended by directinvestors to their affiliatedforeign nationals exemptedfrom controls.December 26—Commerce Departmentannounced, effectiveJan. 1, increased minimumallowable direct investmentabroad by U.S. firmsfrom $10 to $20 million peryear. In addition, variousother regulations were relaxed.January 1974—Controls onforeign investment by U.S.corporations suspended.Sources: International Monetary Fund, and Board of Governors of the Federal Reserve System.have intervened on a broad scale to minimize day-to-day fluctuations in theirrates. Still other countries have continued to intervene in order to keep theirexchange rates stable with respect to a major currency, a group of currencies,or an average of all currencies.Despite the great variety of exchange rate practices by different countries,relations among countries have remained fairly harmonious. Although no199