![]() dollar at spot market rates if available. Members’ currencies are valued by the IMF in terms of the SDR on the basis of their representative rates of exchange, normally against the U.S. The IMF’s unit of account is the special drawing right, or SDR. Access under the Supplemental Reserve Facility (SRF) and the Contingent Credit Line (CCL) are not subject to limits in relation to quotas. Access under other facilities also is reviewed periodically. The access policy, including annual and cumulative limits, under the credit tranches and the Extended Fund Facility (EFF) are reviewed each year. Policies that govern the use of IMF resources by its members, including access limits set in terms of members’ quotas. ![]() It also provides guidance to members on how to conduct exchange rate policies in a way that is consistent with the objective of promoting exchange rate stability and avoiding manipulation. This means surveillance should mainly focus on monetary, fiscal, financial, and exchange rate policies and assess risks and vulnerabilities. The Decision clarifies that country surveillance should be focused on assessing whether countries’ policies promote domestic and external stability. In June 2007, the legal framework for surveillance underwent a major update with the adoption of the Decision on Bilateral Surveillance over Members’ Policies. For its part, the IMF is charged with (i) overseeing the international monetary system to ensure its effective operation, and (ii) monitoring each member's compliance with its policy obligations under Article IV, Section 1. Under Article IV, member countries undertake to collaborate with the IMF and with one another to promote exchange rate stability. Surveillance in its present form was established by Article IV of the IMF’s Articles of Agreement, as revised in the late 1970s following the collapse of the Bretton Woods system of fixed exchange rates. An explanation for the unprecedented accumulation of reserves by emerging markets in recent years is founded on the idea of self-insurance for precautionary purposes when original sin may be an issue.Ģ007 Decision (also known as Decision on Bilateral Surveillance over Members’ Policies.) As such, these countries are forced to borrow in foreign currencies, which, in turn exposes them to currency risk and potentially balance of payments crises. ![]() The name “Bretton Woods II” aims to signal parallels between the unilateral actions of some countries at the present time and the earlier (multilateral) compact that characterised the original Bretton Woods system.Ī concept first introduced by Eichengreen and Hausmann in 1999 and subsequently extended by the authors and Panizza in 20, it refers to the inability of some countries (mainly developing countries) to borrow in their own currencies. Cooper has also noted that the deeper and more sophisticated financial system in advanced countries (in particular, the US) and its more favourable demographics naturally favour such a mixed system. The authors further contend that the system is robust, though others disagree. In particular, the authors noted that differing economic priorities (export-led growth in EMEs and financial liberalization in advanced countries) ensured that the present international monetary system would be a mixed system of fully floating and managed exchange rates. ![]() It refers to the unilateral actions by emerging markets, especially in east Asia, to manage their exchange rates with reference to the US dollar. An explanation for global imbalances first proposed by Dooley, Folkerts-Landau and Garber. ![]()
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