Press Release No. 98/67

Press Release: IMF Incorporates the Euro into the SDR Valuation and Interest Rate Baskets

December 31, 1998

The International Monetary Fund (IMF) has replaced the currency amounts of deutsche mark and French franc in the SDR valuation basket with equivalent amounts of euro, based on the fixed conversion rates between the euro and the deutsche mark and French franc announced today by the European Council. The currencies of Japan, the United Kingdom, and the United States remain in the basket. Effective January 1, 1999, the date of introduction of the single currency in the eleven countries initially participating in the Economic and Monetary Union, the value of the SDR will be the sum of the values of the following amounts of each currency:

The currency amounts in the SDR basket have been rounded in line with the principles set out in the guidelines for the calculation of currency amounts in the SDR basket established by the IMF’s Executive Board. The value of the SDR in terms of currencies is the same today under both the existing (with deutsche mark and French franc) and revised (with euro) valuation baskets.

The financial instruments in the SDR interest rate basket—the market yield of three-month treasury bills for France, the United Kingdom, and the United States, the three-month interbank deposit rate for Germany, and the three-month rate on certificates of deposit in Japan—will remain unchanged, although the French and German instruments will be expressed in euro effective January 1, 1999. The SDR interest rate is determined weekly as a weighted average of interest rates on these five instruments, with weights reflecting the values of the currency amounts shown above.

In line with the currently effective decision on the SDR valuation basket, the next revision of the SDR basket will take place not later than 2000, with any changes to take effect on January 1, 2001. The SDR interest rate basket will be revised at the same time.

Further information on the SDR, its definition, valuation, interest rate and exchange rates can be found on the IMF’s Internet website (www.imf.org) under Fund Rates.