Chapter

Appendix E. Trust Fund

Author(s):
International Monetary Fund
Published Date:
January 1980
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a. Diversification of Investments

1. The Fund, recognizing that the SDR is the unit of account in which the assets of the Trust established by Decision No. 5069-(76/72), adopted May 5, 1976, are valued, concludes that it would be desirable to maintain, in a manner compatible with the operational needs of the Trust, the currency assets of the Trust, other than those that need to be distributed directly to developing countries in proportion to their quotas on August 31, 1975, in assets denominated in SDRs or in a combination of currencies that would, to the maximum extent practicable, correspond to the composition of the SDR basket.

2. The Managing Director is authorized to place in deposits with the Bank for International Settlements, denominated in SDRs, the profits from gold sales realized in the period from July 1 to September 30, 1978, with the exception of the portion of these profits that must be distributed directly to developing countries in proportion to their quotas on August 31, 1975.

3. If, on the occasion of an intended deposit with the Bank for International Settlements during the period referred to in 2 above, the Managing Director finds that the interest rate offered by the Bank for International Settlements on this SDR-denominated deposit is not sufficiently attractive, the Managing Director shall invest the currency assets involved and the currency assets accruing from any subsequent gold sales prior to September 30, 1978 in U.S. Government securities, and will inform the Executive Board of his action.

4. The Executive Board will review this decision not later than October 9, 1978. Before this review, the staff shall complete arrangements, to the extent feasible, with the authorities of the members whose currencies are included in the SDR basket as of July 1, 1978 and that issue obligations in their currencies that the Trust could hold, for the purpose of making possible the placing of investments in domestic currency with them in the proportions corresponding approximately to their share in the SDR basket.

5. The staff shall also inform the Board, as frequently as practicable, but, in any event, not less than once a month during the period July 1 to September 30, 1978, of the approximate yield of an investment of various maturities composed of individual investments in as many as feasible of the 16 currencies that compose the SDR basket.

Decision No. 5812-(78/90) TR

June 16, 1978

b. Amendment of Section III, Paragraph 4(a) of the Trust Instrument

Section III, Paragraph 4(a) of the Instrument to Establish the Trust Fund annexed to Decision No. 5069-(76/ 72), adopted May 5, 1976, is modified to read as follows:

“The Trustee may invest balances of currency held by the Trust with the concurrence of the member whose currency is to be used. The Trustee may invest in (i) marketable obligations of international financial organizations, (ii) marketable obligations denominated in special drawing rights issued by members or national official financial institutions of members, (iii) marketable obligations issued by, and denominated in the currency of, the member, or its national official financial institutions, whose currency is used to make an investment, and (iv) deposits denominated in special drawing rights with commercial banks.”

Decision No. 5972-(78/189)

December 4, 1978

c. Diversification of Trust Fund Investments

1. The Fund, recognizing that the SDR is the unit of account in which the assets of the Trust established by Decision No. 5069-(76/72) adopted May 5, 1976 are valued, concludes that it would be desirable to continue to maintain, in a manner compatible with the operational needs of the Trust, the currency assets of the Trust, other than those that need to be distributed directly to developing countries in proportion to their quotas on August 31, 1975, in assets denominated in SDRs or in a combination of currencies that would, to the maximum extent practicable, correspond to the composition of the SDR basket.

2. The Managing Director shall place in deposits, denominated in SDRs, with the Bank for International Settlements (BIS) the profits from the gold sales realized in the remainder of the auctions to be held under Paragraph 7, Schedule B, with the exception of the portion of these profits that is to be distributed directly to developing countries in proportion to their quotas on August 31, 1975, unless the Managing Director considers that the terms offered by the BIS on an intended deposit denominated in SDRs are not sufficiently attractive. In that event the Managing Director shall inform the Executive Board and make other proposals to it for investment in SDR-denominated obligations, which may include obligations of international financial organizations or members or national official financial institutions of members or commercial banks. If it is not possible to make investments in SDR-denominated obligations on terms that are sufficiently attractive, the Managing Director shall make other proposals for investment.

Decision No. 5973-(78/189) TR

December 4, 1978

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