SDR bonds from the IMF?

April 2, 2009

Analysts are starting to wonder if the International Monetary Fund will issue bonds denominated in its currency, Special Drawing Rights (SDRs), to boost the international lender’s capital. 

G20 leaders meeting today are said to be ready to agree a tripling of the IMF’s resources, to $750 billion. One source at the summit said the IMF might also tap international capital markets. 

BNP Paribas analysts like the idea of SDR bonds that could be bought by central banks reallocating portfolios away from the dollar. “Increased IMF firepower and the IMF likely to issue SDR-denominated bonds later this year will allow equities to move significantly higher,” they say in a client note.

Youssef Boutros-Ghali, Egyptian finance minister and head of the IMF’s policy committee, the IMFC, also likes the idea. 

“It’s an efficient means of financing the IMF,” he told Global Investing this week, adding that a bond tradeable by central bank members of the IMF would enable even smaller members like Egypt to contribute a billion here or there to IMF coffers. 

(Reuters photo: Bogdan Cristel)




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