Does the IMF Have Gold Reserves?
IMF currently owns approximately 90.5 million ounces of gold stored in designated depositories, equivalent to 403.3 tons.
Gold was collected through Members’ initial and ongoing quota contributions to the Fund, along with subsequent increases. Some also came back through repayment obligations.
What is the IMF’s gold holdings?
The International Monetary Fund holds 90.5 million ounces of gold worth $237 billion in its reserves. While its books value the gold at less than $50 an ounce, market prices suggest otherwise and thus research by IMF suggests that selling some portion of these holdings would generate significant revenues and help replenish climate-vulnerable Contingent Reserve Tranche (CCRT).
In 1999-2000, the IMF sold one-eighth of its gold to finance debt relief for heavily indebted poor countries through its no longer active Heavily Indebted Poor Countries Initiative program. Sales were carefully structured so as not to disrupt gold markets and ensure proceeds went toward fulfilling their intended purposes.
IMF Executive Board approved the sale of up to 400 tons annually from its gold deposits located in New York, London, Frankfurt, Paris and Bombay starting in 2009. This totaled up to an overall maximum sale volume of 2,000 tons over five years from 2009. Sales were conducted in accordance with Article XIII Section 2, “the initial distribution and subsequent transfer of IMF gold”. These sales used new rules governing payments to the Fund that include an obligation on member countries to deposit their gold at designated depositories.
How did the IMF acquire its gold holdings?
From 1946 through the late 1970s, the IMF amassed its gold holdings through Members’ initial subscriptions, increases in quota, sales or acceptance of gold as payment for financial obligations; some even flowed back from IMF back to members as part of debt relief initiatives such as Heavily Indebted Poor Countries Initiative.
The IMF’s Articles of Agreement strictly restrict its profits from gold sales to operations and transactions that meet its purposes, and in 1999-2000 sold roughly one-eighth of its holdings through two distinct transactions that closely interlinked.
Gold sales enabled the IMF to boost its low-income lending capacity through the Poverty Reduction and Growth Trust (PRGT), thus providing it with a solid long-term foundation while simultaneously strengthening its capacity as an integral backstop to global financial stability.
Why did the IMF sell its gold holdings?
Dominque Strauss-Kahn, IMF Managing Director, recently reiterated the Fund’s intention of selling gold “in an ethical and transparent manner that doesn’t disrupt the market.” Her goal is to put IMF onto more stable financial footing, which would enable it to increase concessional lending to low-income countries more quickly.
Emerging markets have recently increased their reserves of gold, possibly as a response to geopolitical factors or as an attempt to diversify away from dollar and other major currency holdings.
As demand for gold has increased, so have IMF profits from selling its own gold to customers. As a result, its Executive Board approved distribution of the windfall profits through PRGT lending to low-income countries. However, its long-term benefits remain uncertain: either emerging markets will find alternative methods of diversifying reserve portfolios or they’ll decide that gold’s volatility no longer justifies their risk-taking.
What is the IMF’s current gold holdings?
At present, the IMF holds 90.5 million ounces (2,814.1 tons) in designated depositories at its warehouses, valued on its balance sheet at SDR 35 per ounce – significantly below market prices.
Historically, the International Monetary Fund charged its members interest on loans with gold rather than dollars as loan interest payment and part of their quota subscription fees were collected via this method; consequently, gold became its primary source of revenue to support operations of the Fund.
At its founding, in 1944, member countries contributed 25 percent of their initial quota payments and subsequent increases to be paid in gold – this formed its largest asset. Gold sales are only allowed under strict conditions outlined in Rule F-1 of the IMF Articles of Agreement and have only ever occurred twice (primarily through transactions between central banks) without disrupting markets.
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