< Previous Document Next Document >
ARTICLE XIX, SECTION 2
Special Drawing Rights: Additional Uses

Use of SDRs in Pledges

In accordance with Article XIX, Section 2(c), the Fund prescribes that:

  • 1. A participant, by agreement with another participant, may pledge SDRs to secure the performance of a financial obligation to the other participant, if the obligation 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.

  • 2. Participants intending to engage in an operation involving the pledge of SDRs as pledge or pledgee shall inform the Fund of the terms of the pledge relating to the amount and denomination of the obligation to be secured by the pledge, the amount of SDRs to be pledged, the effective date of the pledge, and the party or other entity designated by the parties to the operation to give instructions to the Fund to terminate the pledge in whole or in part or to transfer the pledged SDRs to the pledgee. As required by Rule P-7 the parties to the operation shall declare that the intended use of SDRs will be in accordance with this prescription.

  • 3. The Fund shall record a pledge of SDRs under this prescription only upon receipt by the Fund of instructions from the parties to the operation. A change in the terms of the pledge referred to in 2 above, if consistent with this prescription, shall take effect upon receipt by the Fund of instructions from the parties to the operation. The amount of SDRs to be pledged shall be set aside and shall not be used during the period of the pledge except in accordance with instructions authorized by the terms of the pledge or in order to discharge an obligation of the pledgor under the Articles of Agreement.

  • 4. The amount of SDRs to be transferred to the pledgee in accordance with instructions authorized by the terms of the pledge in satisfaction of the secured obligation shall discharge an equal amount, in terms of the SDR, of the secured obligation at the time of the transfer. Calculations for this purpose shall be made at the exchange rate of the third business day preceding the date of the transfer or of the second business day preceding the date of the transfer if agreed between the parties.

  • 5. The Fund shall give adequate notice to the parties to an operation under this prescription before pledged SDRs are to be transferred

    • (a) in accordance with the terms of the pledge; or

    • (b) in order to discharge an obligation of the pledgor under the Articles of Agreement.

  • 6. The notice under 5(b) above may include advice on the ways in which the obligation could be discharged without the use of pledged SDRs, or in which the pledge of SDRs could be restored.

  • 7. The Fund shall record operations under this prescription in accordance with Rule P-9.

  • 8. The Fund shall review this decision prior to June 30 of each year.

Decision No. 6053-(79/34) S,

February 26, 1979,

as amended by Decision No. 6438-(80/37) S,

March 5, 1980

< Previous Document Next Document >