Ex. 17. a) Read the text quickly for the main information

READING PRACTICE

Ex. 16. Scan the available financial newspapers. Comment on the most important events in the international monetary system today.

Some Facts About the SDR

The Special Drawing Right (SDR) is an international reserve asset created by the IMF in October 1969. SDRs first came into operation in 1970 as a sort of reserve currency to supplement national currencies and gold as the medium in which countries hold their reserves. It is a new type of money known as "paper gold" and used as the first international legal tender. The SDR serves as a unit of account for the IMF and a number of other international and regional organizations. It is also used in transactions between governments and central banks. However, the market for SDRs is limited because they are not held by individuals or private businesses. In addition, a few countries peg the exchange rates of their currencies to the SDR.

The SDR was initially valued by the IMF in terms of a fixed quantity of gold and was redefined in June 1974 as a basket of 16 currencies. The SDR has changed over time. For many years it was an oddity fully understood only by a few central bankers. In 1981, however, in an attempt to extend its usage beyond the IMF and its accounts (which are denominated in SDRs), it was simplified. It is now based on a weighted average of only five different currencies: the dollar, the Deutschmark, the French franc, the pound sterling and the yen. The basket is revised every five years. The weights in the basket reflect the relative shares of countries in exports of goods and services and the relative shares of the five currencies in official reserve holdings.

Since the adoption of the First Amendment of the IMF's Articles of Agreement in 1969, the IMF has been authorized to allocate SDKs to member countries. Decisions to allocate (or cancel) SDKs require an 85 per cent majority vote of the Board of Governors and are made for "basic periods", which, unless otherwise decided, run for five consecutive years. Cumulative allocations to date total SDR 21.4 billion. SDR allocations are distributed in proportion to IMF members' quota shares. Because of considerable expansion in the IMF's membership since SDRs were last allocated in 1981, 38 of the IMF's 181 member countries have never received SDR allocations. Another 37 members have participated in some, but not all allocations.

SDRs are counted as a part of a country's international reserves, along with official holdings of gold, foreign exchange, and reserve position in the IMF. The share of SDRs in global holdings of nongold reserves has declined from 8.4 per cent at the end of 1972, to 6.5 per cent at the end of 1981, and to 2.3 per cent at the end of 1995.

Words you may need:

Special Drawing Right специальное право заимствования

reserve assets резервные активы

legal tender законное платежное средство

revise v пересматривать

weight n вес

reserve holdings резервы

allocate v выделять, распределять

amendment n поправка, исправление

consecutive adj последовательный

to date на сегодняшний день

total v составлять, достигать

reserve position резервная позиция

b) Complete the sentences below with the information from the text.

1. The Special Drawing Right (SDR) is an international reserve asset....

2. The SDR serves as a unit of account....

3. The SDR has been used at times to denominate financial instruments but....

4.... was redefined in June 1974 as a basket of 16 currencies. 5. Since 1981, the SDR basket has consisted of....

6.... the IMF has been authorized to allocate SDRs to member countries.

7. Because of considerable expansion in the IMF's membership since SDRs were last allocated in 1981....

8. SDRs are counted as a part of a country's international reserves....

9. The share of SDRs in global holdings of nongold reserves has declined....

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