IMF to issue bonds: will this accelerate the dollar's demise?
"IMF Board Authorizes Debut Bond Issuance to Fund Aid (Update1) " http://www.bloomberg.com/apps/news?pid=20601087&sid=ankFTAhAUk68 to quote By Timothy R. Homan July 1 (Bloomberg) -- The International Monetary Fund’s board of directors approved the issuance of bonds to the lender’s 186 members for the first time as it seeks additional sources of money to lend during the global recession. The board made the move in a vote today and did not place a limit on the note sales, Andrew Tweedie, the Washington-based IMF’s finance chief, said on a conference call with reporters. The bonds are part of a wider effort to seek $500 billion in new funding as the lender helps countries from Iceland to Pakistan combat the global financial crisis. The securities, the culmination of months of talks between the fund and its members, will offer the largest emerging-market nations a new way of making IMF contributions while they seek greater say at the fund. China, Brazil and Russia have favored the bonds instead of regular contributions as they wrangle with other members over redistributing the IMF’s voting power. “We expect other countries will follow suit, perhaps other emerging markets,†John Lipsky, first deputy managing director at the fund, said in a Bloomberg Television interview today. “Also, some developed and advanced economies may find this an attractive way to participate in international support for the IMF’s efforts.†Buying Plans An IMF official, speaking on condition they not be named, said the board initially considered limiting the bond sales to $150 billion, based on the level of interest from member states. Board members decided against such a cap because IMF needs will evolve over time, the official said. China’s government has said it will buy $50 billion in notes. Russia and Brazil last month said they would each buy $10 billion of bonds from the IMF. India has also indicated it would contribute to an IMF bond program. The four nations make up the so-called BRICs. “This is a victory for the BRICs, particularly China,†said Claudio Loser, the former director of the IMF’s Western Hemisphere department. “Because they will be investing in the fund they will have, directly or indirectly, some say in the governance of the fund that goes beyond their quota.†The IMF’s “quota†system allocates voting rights to member states based on their financial contributions. The note sales probably would not reach the $500 billion in new funding that the lender is seeking, Lipsky said. Drawing Rights The notes will be denominated in Special Drawing Rights, or SDRs, which represent a basket of currencies consisting of the U.S. dollar, the euro, the yen and the British pound. Note sales denominated in SDRs would be paid interest on a quarterly basis, the IMF said. Chinese officials have sought a greater role over time for SDRs in an effort to reduce the U.S. dollar’s dominance in the global economy. The current official rate for SDRs is 0.37 percent, set using a weighted average of three-month rates in the component currencies. That compares with the 0.195 percent rate for three- month U.S. Treasury bills. One dollar is currently equivalent to about 0.65 SDR. The IMF makes money on its loans by charging countries more than the SDR interest rate. The fund’s board agreed June 22 to keep its lending rate unchanged at 1 percentage point above this year’s SDR interest rate. (end quote, click the link to read the whole article) Did you notice that they decided to NOT place a limit on the note sales?
Government - 3 Answers
Random Answers, Critics, Comments, Opinions :
1 :
It could contribute to the dollar's demise, but I have a feeling our own gov't is doing more to ensure that than the IMF is. The part that really got me was this: 'The IMF’s “quota†system allocates voting rights to member states based on their financial contributions.' So in other words, the more you put into the fund, the more your vote is worth, as far as the IMF goes. It's corruption at the very highest level; and we thought our gov't was screwin' us. Well, it is, but this is worse. What happens to the nations that can't contribute to the 'fund'? Will they be lied about and other countries convinced they are terrorist states? The IMF/World Bank is evil. They do more to put and keep dictators in charge of severly impoverished countries and when those countries default on loans, (the dictators know this at signing) that when they default, all tax revenue, natural resources and industry becomes the property of the IMF. It's evil, there's no other word for it.
2 :
Why is it that every bit of news I see, or hear feels like the end of a Monopoly game where the winner starts taking everything you have with every roll of the dice? The only differences are that this is real life, and I'm watching my country fall to the elite world bankers, and my rights disappear one by one. To have a sucessful globalization/New World Order/one world government I believe it requires that the currencies throughout the world are leveled, and all currency becomes one, or equal value. Basket of currencies?! Hmm...This looks top be exactly what they are doing. In the big picture of global economies I'm thinking Mexico is about middle ground. We have soo much to look forward to don't we? When the American dollar crashes, and our economy becomes like Mexico's I wonder if I can cross the border into Canada and get free welfare, and healthcare like Mexicans do with us? I've believed for years that the IMF, and Federal Reserve have a New World Order agenda, but seeing them set up the whole main structure in just a few months is astonishing, and mind blowing. I never would have thought America would fall soo quietly.
3 :
I believe it will, yes. It is a new currency. The reason they can fix their voting rights based on each members investment is that it is the elite PRIVATE Banking industry. It is its own entity of private corporations and individuals.
