Selected Decisions and Selected Documents of the IMF, Thirty- Eighth Issue -- Review of the Method of Valuation of the SDR—Method of SDR Valuation and Adjustment of Rule T-1(c)

Prepared by the Legal Department of the IMF
As updated as of February 29, 2016

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ARTICLE XV, SECTION 2
Valuation of the Special Drawing Right

REVIEW OF THE METHOD OF VALUATION OF THE SDR—METHOD OF SDR VALUATION AND AMENDMENT OF RULE T-1(C)

A. Method of SDR Valuation

  • 1. The value of the special drawing right shall be determined on the basis of the five currencies issued by Fund members, or by monetary unions that include Fund members (“monetary unions”), whose exports of goods, services, and income credits (“Exports”) had the largest value during the five-year period ending December 31, 2014, or for any subsequent revision, during the most recent five calendar-year period for which the required Exports data are readily available, and which have been determined by the Fund to be freely usable currencies in accordance with Article XXX(f) of the Articles of Agreement. In the case of a monetary union, the determination of the value of Exports shall exclude trade among members that are part of the union. In the case of a member with more than one currency, the determination of the value of Exports shall be based, for each currency, on trade by the member’s economic region for which the currency is legal tender.

  • 2. The percentage weight of each currency selected in accordance with paragraph 1 above for the SDR basket composition shall be equal to the sum of:

    • (a) One half of the share of the member or monetary union issuing that currency in the total Exports of the members or monetary unions issuing the currencies as calculated in accordance with paragraph 1 above; and

    • (b) One sixth of the share of that currency in the total value of balances of the currencies selected in accordance with paragraph 1 above, held by monetary authorities that are not issuers of the relevant currency, and in the case of the currency of a monetary union, by the monetary authorities of members other than those forming part of the monetary union, at the end of each year of the five-year period ending December 31, 2014, and thereafter at the end of
      each year of the relevant five-year period referred to in paragraph 1 above;

    • (c) One sixth of the share of that currency in the total value of foreign exchange market turnover of the currencies selected in accordance with paragraph 1 above, during the five-year period ending December 31, 2014, and thereafter during each relevant five-year period referred to in paragraph 1 above; and

    • (d) One sixth of the share of that currency in the total value of international banking liabilities and international debt securities denominated in the currencies selected in accordance with paragraph 1 above, at the end of each year of the five-year period ending December 31, 2014, and thereafter at the end of each year of the relevant five-year period referred to in paragraph 1 above. In the case of a monetary union, international banking liabilities and international debt securities shall be determined on the basis of the monetary union as one economic region. In the case of a member with more than one currency, these indicators shall be determined on the basis of the economic region of the member for which the currency in question is legal tender.

  • 3. In accordance with the principles set forth in paragraphs 1 and 2 above, effective October 1, 2016,1 the value of one special drawing right shall be the sum of the values of specified amounts of the five currencies listed below. These amounts shall be determined on September 30, 2016 in a manner that will ensure that, at the average exchange rates for the three-month period ending on that date, the shares of each of the five currencies in the value of the special drawing right correspond to the weights specified below.

    Currency Weights (in currency)
    U.S. dollar 41.73
    Euro 30.93
    Chinese renminbi 10.92
    Japanese yen 8.33
    Pound sterling 8.09
  • 4. The list of the currencies that determine the value of the special drawing right, and the amounts of these currencies, shall be revised with effect on October 1, 2021 and thereafter on the first day of each subsequent period of five years in accordance with the following principles, unless the Fund decides otherwise in connection with a revision:

    • (a) The currencies determining the value of the special drawing right shall be determined in accordance with paragraph 1 above, provided that a currency shall not replace another currency included in the list at the time of the determination unless the value of Exports of the member or monetary union, whose currency is not included in the list, during the relevant period exceeds by at least one percent that of a member or a monetary union issuing a currency included in the list.

    • (b) The amount of the five currencies referred to in (a) above shall be determined on the last working day preceding the effective date of the relevant revision in a manner that will ensure that, at the average exchange rates for the three-month period ending on that date, the shares of these currencies in the value of the special drawing right correspond to percentage weights for these currencies, which shall be established for each currency in accordance with (c) below.

    • (c) The percentage weights shall be established in accordance with paragraph 2 above. The percentage weights shall be rounded to the nearest 1 percent or as may be convenient. Adjustments to currency weights resulting from the above formula shall be made, if necessary to ensure that the rounded currency weights sum to one hundred percent, in a manner that has the least impact on relative weights.

  • 5. The determination of the amounts of the currencies under paragraphs 3 and 4 above shall be made in a manner that will ensure that the value of the special drawing right in terms of currencies on the last working day preceding the five-year period for which the determination is made will be the same under the valuation in effect before and after revision, and shall be calculated in accordance with the following guidelines:

    • (a) The currency amounts calculated for the new basket will be expressed in two significant digits provided that the deviation of the percentage share of each currency in the value of the special drawing right, resulting from the application of the average exchange rates for July-September, from the percentage weight as determined under paragraphs 3 and 4(c) above is the minimum on average and will not exceed one half percentage point for any currency.

    • (b) If a solution cannot be obtained by the application of the guidelines set forth in (a) above, the calculation shall be made applying the same guidelines but expressing the amount of each currency in three significant digits, and if no solution is found with three significant digits then the calculation shall be made applying the same guidelines but expressing the amount of each currency in four significant digits.

    • (c) If more than one solution is found in the calculation at the level of two, three, or four significant digits, the solution that has the smallest average deviation will be employed.

B. Amendment of Rule T-1(c)

Effective October 1, 2016, Rule T-1(c) of the Fund’s Rules and Regulations shall be amended by inserting “Chinese renminbi: Three-month benchmark yield for China Treasury bonds as published daily by the China Central Depository and Clearing Co., Ltd.” after “Euro: Three month spot rate for euro area central government bonds with a rating of AA and above published by the ECB”. (SM/15/278, Sup. 2, 11/25/15)

Decision No. 15891-(15/109),

November 30, 2015

1 Ed. Note: Prior to October 1, 2016, see preceding decisions on the method of valuation of the SDR apply.

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