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| Article XVII, Section 3 | ||||
| Special Drawing Rights: Other Holders | ||||
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Use of SDRs in the Acquisition of Hybrid Capital Instruments of the Prescribed Holders A. In accordance with Article XVII, Section 3 of the Articles of Agreement, the Fund prescribes that: 1. A participant may use SDRs to acquire a Hybrid Capital Instrument issued by a prescribed holder which may accept these SDRs in exchange for its Hybrid Capital Instrument, provided however that the amount of SDRs used for acquiring Hybrid Capital Instruments for all operations under this prescription shall not exceed SDR 15 billion on a cumulative basis. For the purposes of this prescription, a Hybrid Capital Instrument issued by a prescribed holder means a financial instrument with perpetual maturity that is junior to other types of debt issued by the prescribed holder and may be written off against losses experienced by the prescribed holder in accordance with the terms of the instrument. 2. The denomination, value and repayment of the contribution by a participant to a prescribed holder through the acquisition of a Hybrid Capital Instrument issued by the prescribed holder shall be subject to the following requirements: a. the contribution is denominated in: (i) SDRs; or (ii) The currency of a member; or (iii) The currency of a nonmember or another unit of account that is composed of currencies and is applied under an intergovernmental agreement, in respect of which arrangements have been completed for determination by the Fund of equal value in terms of the SDR on the basis of Article XIX, Section 7(a) and Rule O-2; and b. the amount of SDRs to be used in a contribution referred to in (a)(ii) or (a)(iii) above is equal in value, in terms of the SDR, at the time of contribution, to the amount of the contribution; and c. for part or all of the contribution (or its remaining value) to be repaid by the prescribed holder to the contributing party in accordance with the terms of the Hybrid Capital Instrument, the prescribed holder has undertaken the following obligations: (i) if the contribution is denominated in SDRs, to repay with the same amount of SDRs, or the equivalent, at the time of repayment, in the currency of a member on the basis of Article XIX, Section 7(a) and Rule O-2, or in the currency of a nonmember or another unit of account under 2 (a)(iii) above in accordance with the arrangements for valuation referred to therein; or (ii) if the contribution is denominated in the currency of a member and is to be repaid in SDRs, to repay with the equivalent in SDRs, at the time of repayment, on the basis of Article XIX, Section 7(a) and Rule O-2; or (iii) if the contribution is under (a)(iii) above and is to be repaid in SDRs, to repay with the equivalent in SDRs, at the time of repayment, in accordance with the arrangements for valuation referred to in (a)(iii) above. 3. The calculations under 2(b) and 2(c) above shall be made at the exchange rate of the third business day preceding the value date or of the second business day preceding the value date if agreed between the parties. 4. A participant and a prescribed holder intending to use SDRs under this prescription shall provide the Fund with a copy of the Hybrid Capital Instrument and any amendment thereof and inform the Fund of the denomination and amount of the contribution, the value date of the contribution, and the reduction in the value of the contribution as a result of any write-off against losses under A.1 above. As required by Rule P-7, the parties shall declare that the intended use of SDRs will be in accordance with this prescription. 5. Transfers of SDRs under this prescription shall be made only upon receipt by the Fund of instructions from the relevant participant and prescribed holder. B. The Fund shall record operations under this prescription in accordance with Rule P-9. C. The Fund shall review this decision when the amount of SDRs used for acquiring Hybrid Capital Instruments in accordance with this decision exceeds SDR 10 billion on cumulative basis, or two years after the approval of this decision, whichever is earlier. (EBS/24/10, Rev. 1, 04/15/24) Decision No. 17711-(24/46), May 10, 2024 | ||||
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