Interim Review of The Adequacy of The Fund’s Precautionary Balances

The paper also reviews policy factors discussed in recent Board meetings that affect the level and accumulation of reserves.

Volume/Issue: Volume 2021 Issue 073

Publication date: December 2021

ISBN: 9781616357955

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Banks and Banking , Economics- Macroeconomics , Money and Monetary Policy , Public Finance , Political Economy , risk management framework , transparency policy , D , financial risks , income volatility , totaling SDR , Income , Credit , Credit risk , Pension spending , COVID-19 , Global

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Summary

Precautionary balances are a key element of the Fund’s multilayered framework to mitigate financial risks. Overall financial risks remain elevated but have not increased significantly since the last review. Staff proposes to leave the medium-term target of SDR 25 billion, and the minimum floor of SDR 15 billion, unchanged at this time. With the projected increase in lending income, the pace of reserve accumulation is expected to remain adequate relative to the medium-term indicative target. The paper also reviews policy factors discussed in recent Board meetings that affect the level and accumulation of reserves.