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Financial Sector Policies

The IMF's Revised Multiple Currency Practices Policy

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Session No.: CE 23.24

Location: Kuwait City, Kuwait

Date: September 18-19, 2023

Delivery Method: In-person Training

Primary Language: English

Interpretation Language: Arabic

    Target Audience

    Mid-level officials in central banks, ministries, or other supervisory authorities working on foreign exchange regulation and supervision, exchange rate and FX market regulation/management and the liberalization and management of current and capital flows more broadly or interested in learning about the conceptual and operational issues related to the use of multiple exchange rates, exchange markets and multiple currency practices.

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    Qualifications

    Participants are expected to have experience with implementing foreign exchange regulation or supervision, and/or be familiar with foreign exchange market operations and current and capital controls. In addition to these qualifications, experience with working with IMF missions is an advantage, although not a requirement.

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    Course Description

    This course, presented jointly by the Legal Department (LEG) and the Capital Flows Unit of the Monetary and Capital Markets Department (MCMAICF) discusses the recently revised policy of the IMF on MCPs.
    On July 1, 2022, the Fund completed a comprehensive review of its policy on multiple currency practices (MCPs). The review focused on updating the MCP policy to take into account recent developments in foreign exchange markets, tackle emerging operational issues, and better align the MCP policy with other relevant Fund's policies. While the revised policy continues to be anchored in key principles laid out at the IMF Articles of Agreement, the IMF Executive Board endorsed several important revisions to the policy. The revised policy will become effective after a transitional period in the fall of 2023. The course will provide an overview of the revised MCP policy, discuss its main features, actions of the authorities that could lead to MCPs, and the process and methodology to identify MCPs. It will also discuss how MCPs can be eliminated or maintained consistently with the IMF's Articles of Agreement. The presentations will discuss typical examples of MCPs, and the interaction of the MCP policy with Fund financing and other relevant policies including the Fund's policy on exchange restrictions and the Institutional View on the liberalization and management of capital flows.
    The course aims to ensure smooth implementation of the revised MCP policy by providing detailed information to country authorities that will enable them to adjust their policies as warranted to ensure continued compliance with the IMF Articles of Agreements. The course will seek to maximize interactions with the participants and provide an opportunity to discuss specific individual country cases. Throughout the course, there will be a focus on actual country examples of using MCPs], and on country experiences with their use.

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    Course Objectives

    Upon completion, participants should:

    • Understand the obligations of IMF member countries concerning MCPs under the IMF Articles of Agreement
    • Be able to identify measures and actions by the authorities that constitute MCPs and how to avoid them or seek temporary approval of those measures by the IMF.
    • Understand the economic costs and benefits of MCPs.
    • Have insight into how the MCP policy affects countries' ability to manage current and capital flows and the operation of exchange rate regimes and FX markets.
    • Understand how to design FX regulatory frameworks with MCPs as well as the challenges which may arise in practice.
    • Have an understanding on the interaction of the MCP policy with Fund financing and other relevant policies including the Fund's policy on exchange restrictions and the Institutional View on the liberalization and management of capital flows.
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