Policy Papers

Interim Review of The Adequacy of The Fund’s Precautionary Balances

Publication Date:

December 16, 2021

Electronic Access:

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Summary:

Precautionary balances are a key element of the Fund’s multilayered framework to mitigate financial risks. Overall financial risks remain elevated but have not increased significantly since the last review. Staff proposes to leave the medium-term target of SDR 25 billion, and the minimum floor of SDR 15 billion, unchanged at this time. With the projected increase in lending income, the pace of reserve accumulation is expected to remain adequate relative to the medium-term indicative target. The paper also reviews policy factors discussed in recent Board meetings that affect the level and accumulation of reserves.

Series:

Policy Paper No. 2021/073

Subject:

COVID-19 Credit Credit risk Expenditure Financial regulation and supervision Health Income Monetary policy Money National accounts Pension spending Political economy

Frequency:

occasional