Selected Decisions Annex (14th Ed)

Policy on Enlarged Access: Borrowing Agreement with the Bank for International Settlements (BIS)

International Monetary Fund
Published Date:
April 1989
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The Managing Director is hereby authorized to send to the General Manager of the Bank for International Settlements (BIS) a telex communication informing him that, on behalf of the Fund, he accepts the proposal set forth in the Annex to this decision and that the proposal set forth in that Annex shall constitute an agreement between the Fund and the BIS which shall enter into force on the date of the Managing Director’s communication.*

Decision No. 6863-(81/81),

May 13, 1981, as amended by

Decisions Nos. 6870-(81/83),

June 1, 1981, and 6925-(81/112),

August 3, 1981


Proposal Received from the Bank for International Settlements (BIS)

1. The Bank for International Settlements (BIS) is prepared to open a facility, free of commission, fee, or charge, in favour of the International Monetary Fund (Fund) for the equivalent of SDR 600 million for a period of two years commencing 1st June 1981 in accordance with the conditions set out in this telex.

With effect from 3rd August 1981, the amount of this facility is increased to SDR 675 million.

2. Drawings on the facility may be made by the Fund on giving seven business days’ notice (Washington, D.C.) by tested telex. Each drawing shall be for a period of six months and shall, subject to similar notice, be renewable at maturity at the request of the Fund for further successive periods of six months provided that no drawing matures any later than two years and six months after the first drawing made by the Fund under this facility. Nevertheless, should the first drawing be made for value later than 31st July 1982 no drawing may mature later than 31st January 1985.

3. Each drawing will be denominated in SDRs but the corresponding payment will be effected by the BIS by transfer of U.S. dollars (Federal Funds) to an account of the Fund at the Federal Reserve Bank of New York, New York.

4. The amount of U.S. dollars to be transferred shall be determined by applying the SDR/U.S. dollar rate established and published by the Fund three business days before the value date.

5. Should the Fund request the BIS to make any payment under this facility in a currency other than the U.S. dollar, the BIS will use its best endeavors to meet the Fund’s wishes. In such cases the applicable exchange rate shall be that established by the Fund for that currency against the SDR three business days before the value date.

6. When a drawing is not renewed at maturity, the U.S. dollar counter-value will be credited by the Fund in U.S. dollars to the account “F” of the BIS at the Federal Reserve Bank of New York, New York. The relevant SDR/U.S. dollar conversion rate will be the rate established by the Fund three business days before the maturity date.

7. The interest rate applicable to each drawing or renewal shall be determined on the basis of the interest rates listed, in paragraph 8 below as notified by the five central banks concerned for the third business day preceding the value date and on the basis of the weighting then given to the currencies concerned in the composition of the SDR. The exchange rates needed for this calculation shall be supplied by the Fund.

The calculation shall be made by multiplying the interest rate for each component currency by the number of units of that currency used by the Fund in its valuation of the Special Drawing Right, and by then multiplying the product by the value of such currency unit in terms of the Special Drawing Right on that date. The resulting products for all component currencies, rounded to the nearest four decimal places, shall be added together, and the total, rounded up to the nearest one sixteenth of one per cent, shall be the interest rate to be applied.

8. The rates to be used for interest calculation are those for the following:

  • —six-month U.S. Treasury Bills,

  • —six-month interbank deposits in Germany,

  • —six-month interbank loans against private paper in France,

  • —average rate for newly issued bank CDs in Japan with a maturity of between 150 and 180 days,

  • —six-month interbank deposits in the United Kingdom.

9. Interest will be paid by the Fund in U.S. dollars at maturity of each six-monthly operation in the manner set out in paragraph 6 above.

10. If during the life of a six-monthly operation the composition of the SDR is changed by the Fund, any payments due three business days or more after the effective date of the change will be made on the basis of the new SDR/U.S. dollar rate. Nevertheless, if the BIS so requests within 30 days after the adoption of the relevant decision of the Fund but not later than 14 days after the date the change became effective, and in agreement also with the central banks whose currencies may be concerned, the former SDR/U.S. dollar exchange rate and the interest rate calculated on the basis of the valuation of the SDR before the change, shall be applied to the operation in question. In that case, however, the Fund will have the option of terminating the agreement and repaying all amounts due under the agreement upon giving 14 days’ notice.

11. The Fund agrees that any member central bank of the BIS which is either the central bank of a country belonging to the Fund or a prescribed holder of SDRs may at any time be wholly or partly substituted for the BIS in respect of its debtor and creditor relationships with the Fund under this facility, in particular in respect of any outstanding drawing and of any commitment for future drawings and renewals. The substitution shall become effective vis-à-vis the Fund upon receipt by the Fund of confirmation to the Fund by the transferee, such confirmation to be transmitted through the BIS, that the transferee accepts the substitution.

12. Please confirm that you are in agreement with the above. This telex and your confirmation will constitute a binding agreement between our two institutions.

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