ABSTRACT
Analysis of the Fund’s simultaneous experience with two financing techniques for its credit operations-currencies for conditional, and SDRs for unconditional, credit-suggests that it would be beneficial to adopt the SDR technique for both types of operations, because
the SDR technique gives creditors a preferred asset-in terms of remuneration and easy usability-that could be further improved by allowing commercial banks to become “other holders” of SDRs;
that technique eliminates the need for the current practice of seeking excessively large quota increases, only 30 percent of which can be used to raise Fund lending;
the consolidation of the General Resources and SDR Accounts should facilitate finding an economically efficient formula for the allocation of the Fund’s general expenditure, including possibly a higher rate of charge on the net use of SDRs than on SDR creditor positions;
the elimination of members’ contributions in SDRs and currencies when their quotas are increased, and hence of the appearance of budgetary commitments, should facilitate the periodic quota rounds, without weakening the role of quotas as the governor of the Fund’s credit extension;
the totality of the changes envisaged would make a much needed contribution to the transparency of the Fund’s financial structure, not least by giving the institution a meaningful balance sheet.
