The adequacy of international liquidity became a problem of increasing concern to the international community during the 1960's. In response, the IMF proposed a new facility, based on Special Drawing Rights, which took effect on October 3, 1969. This new facility, referred to in this publication, was established within the Fund as its Special Drawing Account, through which the new supplement to reserve assets, in the form of special drawing rights, could be allocated.
In Chapter 2 of this year’s Annual Report, the Executive Directors have pointed out that world reserves, which consist of official holdings of gold, foreign exchange, and reserve positions in the Fund, have declined by over 50 per cent relative to world trade since the early 1950’s; relative to international transactions the decline would have been even steeper. After 1964 reserve growth became much less rapid than in earlier years; indeed, reserves would have shown a decline not merely in relative but in absolute terms, owing mainly to gold hoarding, had it not been for the creation of reserves as a by-product of the use of Fund credit facilities, swap arrangements, and other international credit facilities.
In Section 2 of Article XXIV it is envisaged that decisions of the Fund to allocate special drawing rights shall normally be for basic periods of five years’ duration but that the Fund may provide that the duration of a basic period shall be other than five years.