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IMF approves CDB as holder of special drawing rights

Published:Wednesday 12:26 AM

The International Monetary Fund on Tuesday announced that it had approved Caribbean Development Bank, CDB, to become prescribed holders of special drawings rights, or SDRs, an international reserve asset created by the fund.

The CDB, based in Barbados, is among five regional and international banks whose applications were approved on February 8. The others are Development Bank of Latin America, otherwise known as Corporacion Andina de Fomento, or CAF; the European Bank for Reconstruction and Development; the European Investment Bank; and the Inter-American Development Bank.

The IMF said approval of these institutions brings the number of prescribed holders to 20.

“Prescribed holders may acquire, hold and use SDRs in operations with other prescribed holders and participants in the SDR Department. The SDR Department maintains records on SDR transactions, holdings, and allocations. All IMF members are currently participants in the SDR Department,” the IMF said.

It noted that under current IMF decisions, prescribed holders may exchange SDRs for currency, and use SDRs in certain operations, including loans, settlement of financial obligations, swaps, pledges, transfer as security for the performance of financial obligations, forwards, and donations.

Prescribed holders may elect to participate in the SDR Voluntary Trading Agreements or enter into bilateral agreements to conduct their exchanges of SDRs.

“Unlike participants in the SDR Department, prescribed holders do not receive allocations of SDRs, and they may not request an exchange of SDRs in transactions with designation,” the IMF said.

The IMF’s articles of agreement authorise the fund to prescribe as holders of SDRs entities that are either non-members; members that are not participants in the SDR Department; institutions that perform functions of a central bank for one or more IMF member countries; and other official entities.

“The five applicants approved are all ‘other official entities’,” the IMF noted.


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