THE International Monetary Fund is not intended to provide facilities for reconstruction and development. Even though the Fund can be considered as an international "credit pool" it furnishes only short-term credit facilities in international money to enable a member to bridge temporary disequilibria in its balance of payments. The Fund must under no condition let the buying rights of the members degenerate into long-term "loans." The use for investment purposes of the reserves of international money provided by the Fund would violate the very character of the Fund by making it completely illiquid.
On the other hand, it is quite obvious that many members of the Fund will need long-term foreign loans for reconstruction and development so badly that they might be tempted to spend their reserves of international money for investment purposes unless long-term capital is made available to them on reasonable terms. The creation of an International Bank for Reconstruction and Development would, therefore, protect the Fund against misuse of its resources just as the Fund would establish a sound foundation for international capital movements through multilateral clearing, the gradual elimination of exchange restrictions and the maintenance of orderly exchange rates.
The International Bank for Reconstruction and Development, as agreed upon in Bretton Woods,1. has the purpose of facilitating and promoting foreign investment. Domestic loans are excluded from the activities of the Bank; the loans made, par-____________________