- International Monetary Fund
- Published Date:
- October 1969
A REPORT TO THE BOARD OF GOVERNORS OF THE INTERNATIONAL MONETARY FUND CONTAINING THE MANAGING DIRECTOR’S PROPOSAL ON THE ALLOCATION OF SPECIAL DRAWING RIGHTS FOR THE FIRST BASIC PERIOD
International Monetary Fund
- Prefatory Note
- Letter of Transmittal
- Part I. Need to Supplement Reserves
- Part II. Elements of the Proposal
- Part III. Proposal for the Allocation of Special Drawing Rights
- Appendix: Illustrative Tables
The adequacy of international liquidity became a problem of increasing concern to the international community during the decade of the 1960’s. Following several years of examination and negotiation in the Fund and elsewhere, an Outline of a Facility Based on Special Drawing Rights in the Fund was submitted by the Executive Directors of the Fund to the Board of Governors for consideration by the Board at its Annual Meeting in Rio de Janeiro in September 1967. This Outline, which set forth in broad terms the main features of a “facility … intended to meet the need, as and when it arises, for a supplement to existing reserve assets,” was approved by the Board of Governors. Subsequently, it was transformed by the Fund into a legal instrument in the form of proposed amendments to the Articles of Agreement. These amendments, which were approved by the Board of Governors at the end of May 1968, took effect on July 28, 1969 after they had been accepted by the requisite three fifths of the Fund’s members, having four fifths of the total voting power. The new facility referred to in the Outline 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. However, the Special Drawing Account could not become operational until instruments of participation had been deposited by members having at least 75 per cent of the total of quotas in the Fund. This requirement was met on August 6, 1969.
The Articles as amended prescribe certain principles for the allocation of special drawing rights and certain special considerations that are to be taken into account in connection with the first allocation. A proposal to allocate special drawing rights is made by the Managing Director after he has ascertained that there is broad support for it among participants. If the proposal is concurred in by the Executive Directors, it is transmitted to the Board of Governors for decision. This booklet reproduces the Managing Director’s Report to the Board of Governors containing his proposal, which was concurred in by the Executive Directors, on the allocation of special drawing rights for the first basic period, together with his letter transmitting that Report to the Chairman of the Board of Governors.
On October 3, 1969, at its Twenty-Fourth Annual Meeting, held in Washington, D.C., the Board of Governors approved the Managing Director’s proposal and adopted the Resolution set forth on pages 20-21 of his Report. This constituted the first decision of the Fund to allocate special drawing rights.
Letter of Transmittal to the Board of Governors
September 12, 1969
Dear Mr. Chairman:
Pursuant to Article XXIV, Section 4, of the Articles of Agreement of the Fund, I have the honor to submit to the Board of Governors my proposal for the allocation of special drawing rights to participants in the Special Drawing Account. The Executive Directors have taken a decision by which they have concurred in this proposal. This proposal is set forth in Part III of the Report which I am transmitting herewith.
The proposal includes the draft of a Resolution of the Board of Governors for consideration at the forthcoming Annual Meeting. When adopted by the Board of Governors, this Resolution will constitute the first decision of the Fund to allocate special drawing rights.
Very truly yours,
Chairman of the Board of Governors
1969 Annual Meeting
International Monetary Fund