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International Monetary Fund
On February 24, 2012, the Executive Board approved a partial distribution of the general reserve equivalent to SDR 700 million attributed to part of the gold sales windfall profits to all members in proportion to their quotas.
International Monetary Fund. Research Dept.
This chapter focuses on the special drawing rights (SDR) scheme and the working of the gold exchange standard. This paper discusses the main influences involved in the relationship between SDRs and other reserve assets in a context of future reserve growth and suggests certain general conditions that may be necessary for SDRs to become the predominant source of reserve growth. The central question considered in this paper can be approached by asking in what ways the availability of SDRs as a supplement to other reserve growth should be expected to influence the basic forces operating under the gold exchange standard. The approach requiring the smallest element of international control would be to make the return on SDRs more attractive by comparison with that available on foreign exchange holdings, that is, to raise the SDR interest rate. A substantial increase in this rate would involve several separate considerations, which can be given only summary consideration here.
International Monetary Fund

Board that the required satisfactory financing assurances have been secured—as of today, October 12, 2012, satisfactory financing assurances have been received from 134 members regarding the availability of SDR 632.46 million (90.35 percent of the distribution) for new PRGT subsidy contributions ( Appendix Table ). Accordingly, the relevant provisions of the Distribution Decision are effective as of today. Appendix Table. Assurances of PRGT Subsidies Related to the Partial Distribution of SDR 700 million of General Reserves 1/ (As of October 12, 2012

International Monetary Fund

charges in SDRs at a later date or discharge some of its financial obligations to the Fund in SDRs. Availability of SDRs in purchases depends, of course, on the SDR holdings of the GRA and on the policy on sales of SDRs at the time of purchase. 33 The Treasurer's Department advises participants at the time of the purchase whether the Fund will provide SDRs, subject to the purchasing participant's agreement, instead of currencies. (b) Acquisition of SDRs Against Currency Specified by the Fund Participants who hold insufficient SDRs to pay charges to the Fund in

Fred Hirsch

availability of SDRs as a supplement for those assets provides a degree of control over the growth of total liquidity in the long term. The availability of SDRs does not provide an equivalent degree of control over the composition of global reserve growth. Yet, for the long term, this composition will clearly play a central role in determining the nature of the international monetary standard: the reserve system will have a different character if the role of SDRs is essentially or mainly to “back up” the growth of liquidity in other forms than if SDRs themselves are the

Wm. C. Hood

not favorable to the idea of a formal link between the allocation of SDRs and the provision of aid to developing countries, and this subject has not been much pursued; indeed it was not an issue at the Conference. Greater stability For both of the above reasons, the period of floating, while it has generated concerns about the variability of exchange rates and led to an accent on surveillance in order to moderate the changes or levels of exchange rates thought to be excessive, has not favored expansion in the availability of SDRs in the system. However, now

International Monetary Fund

-month rate for treasury bills in France, and the market yield on three-month treasury bills in the United Kingdom. SDR Transfers Total transfers of SDRs in 1996/97 decreased to SDR 19.8 billion, after having reached a record level of SDR 27.4 billion in 1995/96. Two major developments contributed to this decline in SDR transfers. First, delays in a number of large purchases by members during 1996/97 constrained the transfer of SDRs by the GRA to participants, and contributed to inadequate availability of SDRs for members to acquire in transactions by agreement and

Mr. Andrew Crockett

central banks to hold more national currencies would have a very small effect on national capital and money markets. (iii) Most countries manage their monetary policy with domestic objectives in mind, so that to the extent that holdings by overseas central banks affected domestic monetary conditions, they would be offset. If effective control over aggregate liquidity is to be exercised via the Fund’s power to limit the availability of SDRs, therefore, some more direct way is needed of influencing the proportion of SDRs that central banks wish to hold in their

commercial SDRs has been in response to evolving preferences for more diversified, multicurrency portfolios as a means of managing the increased risk of exchange losses in a world of widespread floating. Moreover, expansion of either official or commercial SDRs potentially provides many official depositors with a reserve asset superior to national currencies or gold in terms of exchange stability. As such, the availability of SDRs may reduce switching among currencies by both official reserve holders and private markets, thereby contributing to more orderly exchange

International Monetary Fund

agreeing to use their traditional reserves only in conjunction with SDRs. While the Fund staff was advancing suggestions for such arrangements, monetary authorities were by no means ready to make the Fund in this way a “supranational central bank.” In the absence of such arrangements, Fund officials hoped that the availability of SDRs as a supplement to traditional reserves would be a beginning toward eventual control by the Fund of the volume of international liquidity. They envisaged a par value system and a gold-exchange standard which included the SDR. 25 They based