SDR Currency Basket—Proposed Extension of the Valuation of the SDR

SDR Currency Basket—Proposed Extension of the Valuation of the SDR
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 5
Release: 2015-04-08
Genre: Business & Economics
ISBN: 1498344305

This paper proposes an extension of the current SDR valuation basket for a period of nine months to September 30, 2016. This extension would respond to feedback from SDR users on the desirability of avoiding changes in the basket at the end of the calendar year and facilitate the continued smooth functioning of SDR-related operations. As discussed at the informal Board meeting on July 29, this proposal does not in any way prejudge the outcome of the Review of the Method of Valuation of the SDR.

Review of The Method of Valuation of The SDR—Proposed Extension of The Valuation Of The SDR Basket and Modification of The Date Of Effect of A New Basket

Review of The Method of Valuation of The SDR—Proposed Extension of The Valuation Of The SDR Basket and Modification of The Date Of Effect of A New Basket
Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
Total Pages: 7
Release: 2021-03-15
Genre: Business & Economics
ISBN: 1513574035

On March 5, 2021, the IMF’s Executive Board approved an extension of the current Special Drawing Right (SDR) valuation basket by ten months from September 30, 2021 to July 31, 2022. The IMF normally reviews the composition and valuation of the SDR basket every five years. The extension effectively resets the five-yearly cycle of SDR valuation reviews, with the next review to be completed by mid-2022 and the new basket becoming effective on August 1, 2022. The ten-month extension contributes to the Fund’s ongoing efforts to prioritize work during the COVID-19 crisis and allows for a more suitable effectiveness date of the new basket, which does not coincide with some major markets being closed. The approved extension, as well as effectiveness date of a new basket, is intended to facilitate the continued smooth functioning of SDR-related operations.

Review of the Method of Valuation of the SDR

Review of the Method of Valuation of the SDR
Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
Total Pages: 45
Release: 2005-10-28
Genre: Business & Economics
ISBN: 1498330886

This paper sets out the main issues for the 2005 review of the SDR currency basket and interest rate basket. It provides the basis for the quinquennial review by the Executive Board of the method of valuation of the SDR, in accordance with the Executive Board decision on the calculation of currency amounts for the SDR valuation basket adopted in the context of the 2000 review. The new valuation and interest rate baskets will come into effect on January 1, 2006, unless the Executive Board decides otherwise.

Review of the Method of Valuation of the SDR - Amendment to Rule O-1

Review of the Method of Valuation of the SDR - Amendment to Rule O-1
Author: International Monetary Fund. Finance Dept.
Publisher: International Monetary Fund
Total Pages: 5
Release: 2016-09-30
Genre: Business & Economics
ISBN: 1498345220

This paper seeks Executive Board approval of an amendment to Rule O-1, which specifies the currency amounts in the SDR valuation basket.

Review of the Method of Valuation of the SDR

Review of the Method of Valuation of the SDR
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 100
Release: 2015-11-13
Genre: Business & Economics
ISBN: 1498344011

This paper provides the basis for the quinquennial review of the method of valuation of the Special Drawing Right (SDR). The review considers the composition, size, and weighting of the SDR currency basket and the financial instruments used to determine the SDR interest rate. The analysis in this paper is guided by the informal discussion of Executive Directors in July on initial considerations for the review. In light of Directors’ preference, the two currency selection criteria for SDR inclusion are maintained. Since China continues to meet the export criterion, a key focus of this paper is on assessing whether the renminbi (RMB) could be determined to be a freely usable currency, which is the second criterion. The paper documents the rising international use and trading of the RMB since the 2010 SDR valuation review. A range of indicators suggests that use of the RMB in international transactions has risen substantially, albeit from a low base. The paper also finds that the RMB has become far more actively traded in foreign exchange markets, with sufficient depth to support operations of the size Fund members might undertake without an appreciable change in the exchange rate. Full Text also available in Chinese.

Review of the Method of Valuation of the SDR.

Review of the Method of Valuation of the SDR.
Author: Internationaler Währungsfonds
Publisher:
Total Pages: 0
Release: 2010
Genre:
ISBN:

This paper provides the basis for the quinquennial review of the method of valuation of the SDR, and the financial instruments used to determine the SDR interest rate. Under the governing Board decisions, the new SDR valuation and interest rate baskets would come into effect on January 1, 2011. The review examines developments during the 2005-09 period in the variables relevant to the SDR valuation. These variables include exchange rates, exports of goods, services and income, and reserve holdings. Data for exports of goods and services show China has become the third largest exporter among Fund members and monetary unions including Fund members. Nonetheless, indicators such as reserves and international banking and debt securities suggest that the currencies in the current SDR basket continue to predominate in international financial transactions, and these currencies also account for the bulk of global foreign exchange turnover. At this time, the Chinese renminbi would not appear to meet the criteria for being determined by the Fund to be a freely usable currency, which is also required for inclusion in the SDR basket.

The "Hard" SDR

The
Author: Mr.Subhash Madhav Thakur
Publisher: International Monetary Fund
Total Pages: 58
Release: 1994-03-01
Genre: Business & Economics
ISBN: 1451920792

There has been considerable interest in recent years in the possibility of hardening the SDR, motivated by the desire for an international yardstick of monetary stability. This paper explores various ideas aimed at hardening the SDR in the light of the previous debate on the valuation of the SDR. The paper shows that the construction and implementation of a “hard” SDR which would preserve its purchasing power over goods and services is technically feasible and illustrates this by monthly computations covering the period from July 1974 to July 1993.

Review of the Method of Valuation of the SDR

Review of the Method of Valuation of the SDR
Author: International Monetary
Publisher: International Monetary Fund
Total Pages: 62
Release: 2022-05-16
Genre: Business & Economics
ISBN:

This paper provides the basis for the quinquennial review by the Executive Board of the method of valuation of the Special Drawing Right (SDR). The review covers the composition and weighting of the SDR currency basket, and the financial instruments used to determine the SDR interest rate. In the five-year period for this review (2017‒21), developments in key variables relevant for the SDR valuation suggest that there have been no major changes in the roles of currencies in the world economy. The countries and the currency union (euro area) whose currencies are currently included in the SDR basket remain the five largest exporters and their currencies continue to account for the majority of international financial transactions. Moreover, staff analysis finds that the COVID-19 pandemic and recent fintech developments have no systematic or material impact on the SDR valuation. The paper proposes to maintain the current composition of the SDR currency and interest rate baskets, as well as the method for determining the currency weights and currency amounts in the basket. In line with the Board-approved methodology, the paper proposes updated weights for the currencies in the SDR basket. These maintain the same ranking of the initial weights set in the 2015 review, with slightly higher weights for the U.S. dollar and the Chinese renminbi and, accordingly, somewhat lower weights for the British pound, the euro, and the Japanese yen. The paper also proposes to make explicit the treatment of data gaps in the SDR valuation framework. Findings from a survey of SDR department participants and prescribed holders are used to follow up on operational issues raised in earlier valuation reviews. The new SDR valuation and interest rate baskets are proposed to come into effect on August 1, 2022 for a period of five years.

Proposal For a General Allocation of Special Drawing Rights

Proposal For a General Allocation of Special Drawing Rights
Author: International Monetary Fund
Publisher: International Monetary Fund
Total Pages: 48
Release: 2021-07-12
Genre: Business & Economics
ISBN: 1513583549

On June 25, the Executive Board discussed a proposal for a historic US$650 billion general allocation of SDRs to address the long-term global need to supplement existing reserve assets. Following concurrence by the Executive Board on July 8, the Managing Director submitted the proposal to the Board of Governors on July 9 for its approval by August 2. If approved, which requires an 85 percent majority of the total voting power, the allocation would become effective by the end of August. The proposal makes a case for an allocation of US$650 billion (about SDR 456 billion), based on an assessment of IMF member countries’ long-term global reserve needs. It also includes measures to enhance the transparency and accountability in the reporting and use of SDRs while preserving the reserve asset characteristic of the SDR. The general allocation would help many EMDCs that are liquidity constrained smooth needed adjustment and avoid distortionary policies, while providing scope for spending on crisis response and vaccines.