Originally the bilateral payment agreement, which is usually concluded between two countries for the purpose of the maintenance of the international trade between the parties, covering the general shortage of the international liquidity reserve, rests upon two fundamentally contradictory requirements. Once the payments between the parties are considerably out of equilibrium, the contradiction between two requirements is revealed in the form of the accumulation of the bilateral balance. Confronted with the presence of the accumulated balance and the failure in its reasonable settlement, the bilateral agreement will be necessarily brought to a standstill and supplanted by the multilateral payment agreement. It is the purpose of this paper to review the development of the European bilateral agreement into the multilateral agreement -the European Payments Union.