The IMF held 96.6 million ounces (3,005.3 metric tons) of gold at designated depositories at end January 2010. The IMF’s total gold holdings are valued on its balance sheet at SDR 4.4 billion (about $6.9 billion) on the basis of historical cost. As of February 1, 2010, the IMF's holdings amounted to $105.0 billion at current market prices.
A portion of these holdings was acquired after the Second Amendment of the IMF's Articles of Agreement in April 1978. This portion, which amounted to 12.97 million ounces (403.3 metric tons) prior to the sales agreed in September 2009, is not subject to restitution to IMF member countries (see below), unlike gold the IMF acquired before 1978. In September 2009 the Executive Board authorized the sale of this post-Second Amendment gold, and at end January 2010, a total of 191.3 metric tons of this portion of gold remained on the Fund’s books.
The IMF acquired the majority of its gold holdings prior to the Second Amendment through four main types of transactions.
•First, when the IMF was founded in 1944 it was decided that 25 percent of initial quota subscriptions and subsequent quota increases were to be paid in gold. This represents the largest source of the IMF's gold.
•Second, all payments of charges (interest on member countries' use of IMF credit) were normally made in gold.
•Third, a member wishing to acquire the currency of another member could do so by selling gold to the IMF. The major use of this provision was sales of gold to the IMF by South Africa in 1970–71.
•And finally, member countries could use gold to repay the IMF for credit previously extended.
The IMF's legal framework for gold
Role of gold. The Second Amendment to the Articles of Agreement in April 1978 fundamentally changed the role of gold in the international monetary system by eliminating the use of gold as the common denominator of the post-World War II exchange rate system and as the basis of the value of the Special Drawing Right (SDR). It also abolished the official price of gold and ended the obligatory use of gold in transactions between the IMF and its member countries. It furthermore required that the IMF, when dealing in gold, avoid managing its price or establishing a fixed price.
Transactions. Following the Second Amendment, the Articles of Agreement limit the use of gold in the IMF's operations and transactions. The IMF may sell gold outright on the basis of prevailing market prices, and may accept gold in the discharge of a member country's obligations (loan repayment) at an agreed price, based on market prices at the time of acceptance. Such transactions require Executive Board approval by an 85 percent majority of the total voting power. The IMF does not have the authority under its Articles to engage in any other gold transactions—such as loans, leases, swaps, or use of gold as collateral—nor does it have the authority to buy gold.
Restitution. The Articles also provide for the restitution of the gold the Fund held on the date of the Second Amendment (April 1978) to those countries that were members of the Fund as of August 31, 1975. Restitution would involve the sale of gold to this group of member countries at the former official price of SDR 35 per ounce, with such sales made to those members who agree to buy it in proportion to their quotas on the date of the Second Amendment. A decision to restitute gold requires support from an 85 percent majority of the total voting power. The Articles do not provide for the restitution of gold the Fund has acquired after the date of the Second Amendment.
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