This week the International Monetary Fund host their annual Spring Meetings in Washington DC amidst rising uncertainty over the future relationship between Britain and the EU. Ahead of the gathering, general manager of the Bank for International Settlements, Agustin Carstens, has spoken of the IMF having ‘inadequate resources‘ to respond to a major new economic decline:
This leaves us with the problem of having to improvise in times of crisis. If the Fund cannot do it others will have to do it otherwise the economic costs will be huge.
Carstens was speaking in reference to the IMF’s quota subscriptions. As the institution explains on its website, quotas are the main source of funding for the IMF. Every member of the IMF (currently 189) is assigned a quota, with the largest economies contributing the most.
Up to 25% of a country’s subscription has to be paid in Special Drawing Rights or ‘foreign currencies acceptable to the IMF.’ SDR’s are the IMF’s unit of account, and are made up of the world’s five most prominent currencies – the dollar, the euro, the renminbi, the yen and the pound. The remaining 75% of a nation’s quota must be paid in their own currency.
With the United States being the largest member of the IMF, their quota is the most substantial. As of March 2017, their share was $118 billion. In SDR’s this equates to a value of 82.99 billion. The IMF values SDR’s in dollars – the latest reading shows that the U.S. dollar equivalent of $1 in SDR’s is 72 cents.
According to the IMF, in September 181 members had made all their quota payments, with total quotas standing at $675 billion (475 billion when measured in SDR’s).
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