## EXECUTIVE SUMMARY

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**Canonical URL:** [EXECUTIVE SUMMARY](https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022044.pdf)

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### Overview
- Reporting period: September 1, 2021 to August 31, 2022.
- The SDR market has continued to function smoothly since the SDR allocation of SDR 456 billion (US$650 billion) on August 2, 2021.
- Cumulative allocations now amount to SDR 660.7 billion.
- VTAs (Voluntary Trading Arrangements) are bilateral arrangements between the Fund and SDR participants or prescribed holders; currently 39 SDR participants and 1 prescribed holder have VTAs.

### SDR Sales Through VTAs (Key findings)
- Period covered: September 2021 to August 2022.
- Number and volume increase vs. prior 12-month period driven by the 2021 SDR allocation.
- From September 2021 to August 2022:
  - 148 SDR sales transactions amounting to SDR 18.3 billion (compared to 30 sales totaling SDR 1.7 billion in the previous 12 months).
  - 48 IMF members sold SDR 17.3 billion through VTAs; prescribed holders sold SDR 1.0 billion.
  - Individual sale requests ranged from SDR 37 thousand to SDR 1.7 billion.
  - LICs accounted for 29 percent of the total SDR sales volume.
  - Members sold on average SDR 360 million in the reporting period, equivalent to 82 percent of their individual 2021 allocations.
- Monthly activity:
  - September 2021 sales totaled SDR 4.3 billion.
  - Average monthly sales since then: SDR 1.4 billion per month.
- Cumulative since January 2017 to August 31, 2022:
  - SDR sales totaled SDR 34.1 billion across 360 transactions (average size SDR 95 million) by 63 SDR participants and 4 prescribed holders.

### Acquisitions of SDRs Through VTAs and the GRA (Key findings)
- From September 2021 to August 2022:
  - 90 acquisitions amounting to SDR 2.9 billion (compared to 101 transactions for SDR 1.3 billion in prior 12 months).
  - Number of acquisitions declined due to allocation providing new SDRs to participants; volume increased due to Administered Account for Ukraine (transactions about SDR 1.6 billion).
- Since January 2017:
  - Fund assisted 70 members and 2 prescribed holders in over 500 purchase transactions through VTAs amounting to SDR 6.1 billion.
  - A total of 166 transactions (SDR 2.8 billion) were handled through the GRA.
- Memorandum items (Jan 1, 2017–Aug 31, 2022):
  - Number of requests through VTAs: 501; number of transactions through VTAs: 512; amount of acquisitions through VTAs: SDR 6,104 million.
  - Acquisitions of SDRs from GRA: number of transactions 166; amount SDR 2,782 million.
  - Total number of transactions 678; total amount SDR 8,887 million.
- Member balances:
  - There are currently 24 members with SDR holdings of less than five percent of their cumulative allocation.
  - Members are strongly encouraged to monitor SDR balances to meet upcoming IMF obligations payable in SDRs.
  - Note: Average SDR interest rate increased from .05 percent as of end-September 2021 to 1.566 percent as of end-August 2022.

### Other SDR Transactions
- Bilateral SDR transactions (participant-to-participant or participant-to-prescribed holder) are historically limited.
- Average annual bilateral amount over last five years: SDR 0.2 billion.
- Increase in calendar year 2021 driven by bilateral sales after the 2021 allocation; rise in 2022 mainly due to settlement of financial obligation between a participant and prescribed holder.
- Cumulative since 2017 (to Aug 31, 2022): 193 bilateral transactions amounting to SDR 1.2 billion.

### Voluntary Trading Arrangements (Market Capacity and Functioning)
- VTAs continue to have ample capacity to meet demand for exchange of SDRs into currencies.
- VTA trading capacities consider minimum and maximum SDR amounts a VTA member is willing to hold and actual SDR holdings.
- As of August 31, 2022 (status of VTAs in place):
  - Buying capacity of VTAs: about SDR 237 billion.
  - Selling capacity of VTAs: about SDR 134 billion.
- Since the SDR allocation:
  - Eight new VTA members have been welcomed to the SDR trading market.
  - Many existing VTA members provided additional operational flexibilities.
  - Discussions with potential new entrants continue in context of SDR channeling, which encourages contributors to have VTAs.

### Trading capacities and ranges
- Trading capacity determination: based on the minimum and maximum SDR amounts a VTA member is willing to hold (trading range) and actual SDR holdings.
- At end-August 2022 purchasing and selling capacities were about SDR 237 billion and SDR 134   billion, respectively.
- Both capacities increased from SDR 234.1 billion to purchase SDRs and SDR 109.0 billion to sell SDRs as of end-September 2021.
- Table 4 (summary figures):
  - Standard trading range 50 – 150 (In percent of Net Cumulative Allocations): Number 123; Purchasing Capacity 9,198 (millions of SDRs); Average Purchasing Capacity 3,266; Selling Capacity 44,808; Average Selling Capacity 3,734.
  - Eurosystem trading range 65 – 135: Number 18; Purchasing Capacity 65,980; Average Purchasing Capacity 3,666; Selling Capacity 60,008; Average Selling Capacity 3,334. ¹
  - Other various ranges 35 – 200: Number 8; Purchasing Capacity 132,092; Average Purchasing Capacity 16,511; Selling Capacity 29,460; Average Selling Capacity 3,682.
  - Total: Number 38; Purchasing Capacity 237,270; Average Purchasing Capacity 6,244; Selling Capacity 134,276; Average Selling Capacity 3,534.
- Purchasing Capacity by region (as of August 31, 2022):
  - Purchasing Capacity SDR 237.3 billion.
  - Asia and Pacific, 35%; Europe, 31%; Middle East & Central Asia, 4%; Western Hemisphere, 30%.
- Selling Capacity by region (as of August 31, 2022):
  - Selling Capacity SDR 134.3 billion.
  - Asia and Pacific, 15%; Europe, 60%; Middle East & Central Asia, 5%; Western Hemisphere, 20%.
- Notes:
  - ¹ Two non-euro system members have adopted this range. Includes the nominal trading range for the ECB, a prescribed holder of SDRs, that adds to the euro area trading capacity.
  - ² Includes the purchasing and selling capacity of one VTA member that had credit outstanding to the Fund within last 12 months.

### Distribution of requests and operational criteria
- Criteria to ensure equitable use over time:
  - The relative dispersion of SDR holdings: based on the ratio of SDR holdings-to-allocation of individual VTA members; members with relatively low SDR holdings-to-allocation ratios are more likely to be called to purchase SDRs.
  - The scope of VTAs to absorb a given transaction: the deviation of SDR holdings from the mid-point VTA trading range determines how far each individual VTA is from its minimum and maximum trading ranges.
  - Other considerations: relative use of each VTA as a share of allocation of total VTAs, individual transaction and counterparty limits, currency preferences, notification periods and holidays, and the need to split large requests among multiple VTAs.

### Participation, dispersion, and transaction statistics
- VTA utilization and participation:
  - In the reporting period, 37 VTAs were utilized.
  - Each VTA member participated on average in 6 SDR trades.
- SDR holdings of VTA members:
  - Clustered tightly around the median holdings-to-allocation ratio of 101.6 percent.
  - The SDR holdings-to-allocation ratio of VTA members increased on average by about 2.7 percentage points during the reporting period.
- Sales of SDRs (September 1, 2021–August 31, 2022) — regional breakdown (millions):
  - Asia and Pacific: Number of VTAs Available 6; Number of VTAs Used 6; Number of Sales 35; Amount of SDR Sales 5,371; Percent of Sales 29; Percent by Purchasing Capacity 35.
  - Europe: Number of VTAs Available 24; Number of VTAs Used 23; Number of Sales 73; Amount of SDR Sales 7,176; Percent of Sales 39; Percent by Purchasing Capacity 31.
  - Middle East & Central Asia: Number of VTAs Available 3; Number of VTAs Used 3; Number of Sales 8; Amount of SDR Sales 442; Percent of Sales 2; Percent by Purchasing Capacity 4.
  - Western Hemisphere: Number of VTAs Available 5; Number of VTAs Used 5; Number of Sales 32; Amount of SDR Sales 5,349; Percent of Sales 29; Percent by Purchasing Capacity 30.
  - Total: Number of VTAs Available 38; Number of VTAs Used 37; Number of Sales 148; Amount of SDR Sales 18,338; Percent of Sales 100; Percent by Purchasing Capacity 100.
- Acquisitions of SDRs (September 1, 2021–August 31, 2022) — regional breakdown (millions):
  - Asia and Pacific: Number of VTAs Available 6; Number of VTAs Used 5; Number of Acquisitions 15; Amount of SDR Acquisitions 1,062; Percent of Acquisitions 42; Percent by Selling Capacity 15.
  - Europe: Number of VTAs Available 24; Number of VTAs Used 14; Number of Acquisitions 45; Amount of SDR Acquisitions 1,047; Percent of Acquisitions 41; Percent by Selling Capacity 60.
  - Middle East & Central Asia: Number of VTAs Available 3; Number of VTAs Used 2; Number of Acquisitions 2; Amount of SDR Acquisitions 1; Percent of Acquisitions 0; Percent by Selling Capacity 5.
  - Western Hemisphere: Number of VTAs Available 5; Number of VTAs Used 3; Number of Acquisitions 12; Amount of SDR Acquisitions 420; Percent of Acquisitions 17; Percent by Selling Capacity 20.
  - Total: Number of VTAs Available 38; Number of VTAs Used 24; Number of Acquisitions 74; Amount of SDR Acquisitions 2,530; Percent of Acquisitions 100; Percent by Selling Capacity 100.

### New members and measures to strengthen the VTA market
- Eight new VTA members finalized during the period: Algeria, Brazil, Estonia, Lithuania, Luxembourg, Mauritius, Oman, and Singapore.
- Mauritius is the first sub-Saharan African member to join a VTA, providing further geographical diversification.
- Staff implemented additional operational flexibilities in existing VTAs, including:
  - Increased currency flexibility.
  - Removed and increased transactional limits.
  - Reduced advance notification period.
  - Increased VTA trading capacity.
- Staff continue to engage with existing VTA members and potential new entrants; several other VTAs are under discussion, particularly in the context of channeling of SDRs, where having a VTA in place is strongly encouraged.

### SDR reporting and disclosure
- Increased disclosure of information about SDR transactions:
  - The IMF’s annual and quarterly financial reports include holdings and allocations by member and aggregate data about SDR flows.
  - The quarterly financial reports that include individual member’s SDR holdings also provide net changes split in two broad categories: (i) those related to IMF operations; and (ii) SDR trading and other uses.
  - The IMF Finances webpage continues to publish monthly information on SDR holdings and allocations of participants.
  - The periodic IMF Financial Operations publication provides extensive information on the functioning of the voluntary SDR trading market, including operating modalities, capacity, trading by region, and aggregate transaction volumes.

*Source: IMF staff calculations, Annual Update on SDR Trading Operations (content unit: ppea2022044).*

### EXECUTIVE SUMMARY

### EXECUTIVE SUMMARY

### Overview
- Paper provides an update on the status of the SDR trading market and operations one year after the fourth general allocation of SDRs.
- Reporting period: September 1, 2021 to August 31, 2022.
- The SDR market has continued to function smoothly since the SDR allocation of SDR 456 billion (US$650 billion) on August 2, 2021.
- Cumulative allocations now amount to SDR 660.7 billion.
- VTAs (Voluntary Trading Arrangements) are bilateral arrangements between the Fund and SDR participants or prescribed holders; currently 39 SDR participants and 1 prescribed holder have VTAs (Box 1).

### SDR Sales Through VTAs (Key findings)
- Period covered: September 2021 to August 2022.
- Number and volume increase vs. prior 12-month period driven by the 2021 SDR allocation.
- From September 2021 to August 2022:
  - 148 SDR sales transactions amounting to SDR 18.3 billion (compared to 30 sales totaling SDR 1.7 billion in the previous 12 months).
  - 48 IMF members sold SDR 17.3 billion through VTAs; prescribed holders sold SDR 1.0 billion.
  - Individual sale requests ranged from SDR 37 thousand to SDR 1.7 billion.
  - LICs accounted for 29 percent of the total SDR sales volume.
  - Members sold on average SDR 360 million in the reporting period, equivalent to 82 percent of their individual 2021 allocations.
- Monthly activity:
  - September 2021 sales totaled SDR 4.3 billion.
  - Average monthly sales since then: SDR 1.4 billion per month.
- Cumulative since January 2017 to August 31, 2022:
  - SDR sales totaled SDR 34.1 billion across 360 transactions (average size SDR 95 million) by 63 SDR participants and 4 prescribed holders.

### Acquisitions of SDRs Through VTAs and the GRA (Key findings)
- From September 2021 to August 2022:
  - 90 acquisitions amounting to SDR 2.9 billion (compared to 101 transactions for SDR 1.3 billion in prior 12 months).
  - Number of acquisitions declined due to allocation providing new SDRs to participants; volume increased due to Administered Account for Ukraine (transactions about SDR 1.6 billion).
- Since January 2017:
  - Fund assisted 70 members and 2 prescribed holders in over 500 purchase transactions through VTAs amounting to SDR 6.1 billion.
  - A total of 166 transactions (SDR 2.8 billion) were handled through the GRA.
- Memorandum items (Jan 1, 2017–Aug 31, 2022):
  - Number of requests through VTAs: 501; number of transactions through VTAs: 512; amount of acquisitions through VTAs: SDR 6,104 million.
  - Acquisitions of SDRs from GRA: number of transactions 166; amount SDR 2,782 million.
  - Total number of transactions 678; total amount SDR 8,887 million.
- Member balances:
  - There are currently 24 members with SDR holdings of less than five percent of their cumulative allocation.
  - Members are strongly encouraged to monitor SDR balances to meet upcoming IMF obligations payable in SDRs.
  - Note: Average SDR interest rate increased from .05 percent as of end-September 2021 to 1.566 percent as of end-August 2022.

### Other SDR Transactions
- Bilateral SDR transactions (participant-to-participant or participant-to-prescribed holder) are historically limited.
- Average annual bilateral amount over last five years: SDR 0.2 billion.
- Increase in calendar year 2021 driven by bilateral sales after the 2021 allocation; rise in 2022 mainly due to settlement of financial obligation between a participant and prescribed holder.
- Cumulative since 2017 (to Aug 31, 2022): 193 bilateral transactions amounting to SDR 1.2 billion.

### Voluntary Trading Arrangements (Market Capacity and Functioning)
- VTAs continue to have ample capacity to meet demand for exchange of SDRs into currencies.
- VTA trading capacities consider minimum and maximum SDR amounts a VTA member is willing to hold and actual SDR holdings.
- As of August 31, 2022 (status of VTAs in place):
  - Buying capacity of VTAs: about SDR 237 billion.
  - Selling capacity of VTAs: about SDR 134 billion.
- Since the SDR allocation:
  - Eight new VTA members have been welcomed to the SDR trading market.
  - Many existing VTA members provided additional operational flexibilities.
  - Discussions with potential new entrants continue in context of SDR channeling, which encourages contributors to have VTAs.

### Staff actions and transparency commitments
- Staff will issue an ex-post report on the use of SDRs by end-2023, in line with commitments at time of the SDR allocation.
- Information on members’ use or plans to use SDRs is available on the IMF website (Tracker on the Allocated Use of SDRs).
- Staff will continue to monitor SDR balances and prompt members to ensure timely acquisitions of SDRs.

_International Monetary Fund — Annual Update on SDR Trading Operations (Executive Summary), September 21, 2022._

### 10.      VTAs have ample capacities to accommodate future exchanges of SDRs. The SDR

### 10.      VTAs have ample capacities to accommodate future exchanges of SDRs.

### Trading capacities and ranges
- The SDR trading capacities are determined by considering the minimum and maximum SDR amounts that a VTA member is willing to hold (the trading range) and the actual SDR holdings of each VTA member.
- At end-August 2022 the purchasing and selling capacities remain large at about SDR 237 billion and SDR 134   billion, respectively.
- Both capacities increased from SDR 234.1 billion to purchase SDRs and SDR 109.0 billion to sell SDRs as of end-September 2021.
- Table 4 (summary figures):
  - Standard trading range 50 – 150 (In percent of Net Cumulative Allocations): Number 123; Purchasing Capacity 9,198 (millions of SDRs); Average Purchasing Capacity 3,266; Selling Capacity 44,808; Average Selling Capacity 3,734.
  - Eurosystem trading range 65 – 135: Number 18; Purchasing Capacity 65,980; Average Purchasing Capacity 3,666; Selling Capacity 60,008; Average Selling Capacity 3,334. ¹
  - Other various ranges 35 – 200: Number 8; Purchasing Capacity 132,092; Average Purchasing Capacity 16,511; Selling Capacity 29,460; Average Selling Capacity 3,682.
  - Total: Number 38; Purchasing Capacity 237,270; Average Purchasing Capacity 6,244; Selling Capacity 134,276; Average Selling Capacity 3,534.
- Purchasing Capacity by region (as of August 31, 2022):
  - Purchasing Capacity SDR 237.3 billion.
  - Asia and Pacific, 35%; Europe, 31%; Middle East & Central Asia, 4%; Western Hemisphere, 30%.
- Selling Capacity by region (as of August 31, 2022):
  - Selling Capacity SDR 134.3 billion.
  - Asia and Pacific, 15%; Europe, 60%; Middle East & Central Asia, 5%; Western Hemisphere, 20%.
- Notes:
  - ¹ Two non-euro system members have adopted this range. Includes the nominal trading range for the ECB, a prescribed holder of SDRs, that adds to the euro area trading capacity.
  - ² Includes the purchasing and selling capacity of one VTA member that had credit outstanding to the Fund within last 12 months.

### Distribution of requests and operational criteria
- In distributing sale and purchase requests across VTAs, staff consider criteria aimed at ensuring equitable use over time:
  - The relative dispersion of SDR holdings: based on the ratio of SDR holdings-to-allocation of individual VTA members; members with relatively low SDR holdings-to-allocation ratios are more likely to be called to purchase SDRs.
  - The scope of VTAs to absorb a given transaction: the deviation of SDR holdings from the mid-point VTA trading range determines how far each individual VTA is from its minimum and maximum trading ranges.
  - Other considerations: relative use of each VTA as a share of allocation of total VTAs, individual transaction and counterparty limits, currency preferences, notification periods and holidays, and the need to split large requests among multiple VTAs.

### Participation, dispersion, and transaction statistics
- The outlined modalities have been successful in spreading SDR transactions across VTAs:
  - In the reporting period, 37 VTAs were utilized.
  - Each VTA member participated on average in 6 SDR trades.
- SDR holdings of VTA members:
  - Clustered tightly around the median holdings-to-allocation ratio of 101.6 percent (Figure 5).
  - The SDR holdings-to-allocation ratio of VTA members increased on average by about 2.7 percentage points during the reporting period.
- Sales of SDRs (September 1, 2021–August 31, 2022) — regional breakdown (millions):
  - Asia and Pacific: Number of VTAs Available 6; Number of VTAs Used 6; Number of Sales 35; Amount of SDR Sales 5,371; Percent of Sales 29; Percent by Purchasing Capacity 35.
  - Europe: Number of VTAs Available 24; Number of VTAs Used 23; Number of Sales 73; Amount of SDR Sales 7,176; Percent of Sales 39; Percent by Purchasing Capacity 31.
  - Middle East & Central Asia: Number of VTAs Available 3; Number of VTAs Used 3; Number of Sales 8; Amount of SDR Sales 442; Percent of Sales 2; Percent by Purchasing Capacity 4.
  - Western Hemisphere: Number of VTAs Available 5; Number of VTAs Used 5; Number of Sales 32; Amount of SDR Sales 5,349; Percent of Sales 29; Percent by Purchasing Capacity 30.
  - Total: Number of VTAs Available 38; Number of VTAs Used 37; Number of Sales 148; Amount of SDR Sales 18,338; Percent of Sales 100; Percent by Purchasing Capacity 100.
- Acquisitions of SDRs (September 1, 2021–August 31, 2022) — regional breakdown (millions):
  - Asia and Pacific: Number of VTAs Available 6; Number of VTAs Used 5; Number of Acquisitions 15; Amount of SDR Acquisitions 1,062; Percent of Acquisitions 42; Percent by Selling Capacity 15.
  - Europe: Number of VTAs Available 24; Number of VTAs Used 14; Number of Acquisitions 45; Amount of SDR Acquisitions 1,047; Percent of Acquisitions 41; Percent by Selling Capacity 60.
  - Middle East & Central Asia: Number of VTAs Available 3; Number of VTAs Used 2; Number of Acquisitions 2; Amount of SDR Acquisitions 1; Percent of Acquisitions 0; Percent by Selling Capacity 5.
  - Western Hemisphere: Number of VTAs Available 5; Number of VTAs Used 3; Number of Acquisitions 12; Amount of SDR Acquisitions 420; Percent of Acquisitions 17; Percent by Selling Capacity 20.
  - Total: Number of VTAs Available 38; Number of VTAs Used 24; Number of Acquisitions 74; Amount of SDR Acquisitions 2,530; Percent of Acquisitions 100; Percent by Selling Capacity 100.

### New members and measures to strengthen the VTA market
- Since the 2021 allocation staff onboarded eight new VTA members finalized during the period: Algeria, Brazil, Estonia, Lithuania, Luxembourg, Mauritius, Oman, and Singapore.
- Mauritius is the first sub-Saharan African member to join a VTA, providing further geographical diversification.
- Staff implemented additional operational flexibilities in existing VTAs to strengthen the voluntary trading market, including:
  - Increased currency flexibility.
  - Removed and increased transactional limits.
  - Reduced advance notification period.
  - Increased VTA trading capacity.
- Staff continue to engage with existing VTA members and potential new entrants; several other VTAs are under discussion, particularly in the context of channeling of SDRs, where having a VTA in place is strongly encouraged.

### SDR reporting and disclosure
- The Fund has increased disclosure of information about SDR transactions:
  - The IMF’s annual and quarterly financial reports include holdings and allocations by member and aggregate data about SDR flows. 16
  - The quarterly financial reports that include individual member’s SDR holdings also provide net changes split in two broad categories: (i) those related to IMF operations; and (ii) SDR trading and other uses. 17
  - The IMF Finances webpage continues to publish monthly information on SDR holdings and allocations of participants. 18
  - The periodic IMF Financial Operations publication provides extensive information on the functioning of the voluntary SDR trading market, including operating modalities, capacity, trading by region, and aggregate transaction volumes.

*Source: IMF staff calculations, Annual Update on SDR Trading Operations (content unit: ppea2022044).*

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_Source: https://www.imf.org/-/media/files/publications/pp/2022/english/ppea2022044.pdf_