- International Monetary Fund
- Published Date:
- June 1995
© 1995 International Monetary Fund
Editor: Elisa Diehl
Composition and Design: IMF Graphics Section
ISBN No. 1-55775-528-0
Address orders to:
External Relations Department, Publication Services
International Monetary Fund, Washington D.C. 20431
Telephone: (202) 623-7430; Telefax: (202) 623-7201
Since the publication of the first edition of this guide in 1982 (and reprinted in 1985 with minor revisions), a number of changes have taken place that have considerably facilitated transactions and operations in the Special Drawing Rights Department and have led to a large increase in their number and volume. Salient among these changes are the emergence of the SDR buying and selling (two-way) arrangements and the wider use of SDRs in IMF-related operations. Under the two-way arrangements, certain members stand ready to buy or sell SDRs in voluntary transactions for one or more freely usable currencies at any time, provided that their SDR holdings remain within certain limits. These arrangements now accommodate the vast majority of acquisitions and sales of SDRs, and they have obviated any need for recourse to the designation mechanism since September 1987.
This version of the guide, which supersedes the first edition, takes account of these and other significant changes, such as the development of arrangements for the same-day loan and repayment of SDRs used in connection with the payment to the IMF of the reserve asset portion of quota subscriptions and quota increases. In addition, the present edition provides an expanded coverage of typical accounting entries for transactions and operations in SDRs. It has been prepared in the Operations Division for SDRs and Administered Accounts of the Treasurer's Department and has benefited from the comments of colleagues within the Treasurer's Department and elsewhere in the IMF.
International Monetary Fund
No. 5809-(78/88), Use of SDRs in Repurchases
No. 6275-(79/158) G/S, Use of Currencies and SDRs in the GRA and Principles and Procedures for Designation; (c) Transfers of SDRs Under Article V, Section 3(f)
The special drawing right (SDR) is an international reserve asset created by the International Monetary Fund to supplement existing reserves. It is valued on the basis of a basket of five currencies and can be used in a wide variety of transactions and operations among official holders.
The Second Amendment of the Articles of Agreement, which became effective April 1, 1978, considerably enhances the role of the SDR and requires participants to collaborate with the Fund and with each other to make the SDR the principal reserve asset in the international monetary system. To this end the SDR has been given increasingly attractive features in terms of yield and liquidity, including a wider range of uses. The scope of operations and transactions in SDRs by the Fund itself has also been enlarged. In addition, the Fund has been given the authority to prescribe (or permit) operations in SDRs not specifically mentioned in the Articles.
The purpose of this guide is to explain to participants in the Special Drawing Rights Department and prescribed holders of SDRs the various transactions and operations that are permitted under the Articles of Agreement and applicable decisions of the Executive Board. The guide describes the characteristics of the SDR and sets out the procedures for using and acquiring it in various transactions and operations. Appendix I describes in more detail allocations of SDRs, the calculation of the SDR valuation and rate of interest, and arrangements for SDR transactions and offers some suggestions for accounting for the SDR. Appendix II sets out the procedures and forms of communication for the use and receipts of SDRs in transactions with designation and describes the preparation and execution of the designation plan. Appendix III reproduces pertinent extracts from the Articles of Agreement, the By-Laws, Rules, and Regulations, and Executive Board decisions. As new decisions are taken by the Fund that affect the scope of SDR uses or any of the other material presented here, revised editions of the guide will be prepared.