Ex. 16. Scan the available financial newspapers. Comment on the most important events in the international monetary system today.

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Ex. 16. Scan the available financial newspapers. Comment on the most important events in the international monetary system today.


Ex. 17. a) Read the text quickly for the main information.

Some Facts About the SDR


The Special Drawing Right (SDR) is an international reserve asset created by the IMF in October 1969. SDRs first came into operation in 1970 as a sort of reserve currency to supplement national currencies and gold as the medium in which countries hold their reserves. It is a new type of money known as "paper gold" and used as the first international legal tender. The SDR serves as a unit of account for the IMF and a number of other international and regional organizations. It is also used in transactions between governments and central banks. However, the market for SDRs is limited because they are not held by individuals or private businesses. In addition, a few countries peg the exchange rates of their currencies to the SDR.

The SDR was initially valued by the IMF in terms of a fixed quantity of gold and was redefined in June 1974 as a basket of 16 currencies. The SDR has changed over time. For many years it was an oddity fully understood only by a few central bankers. In 1981, however, in an attempt to extend its usage beyond the IMF and its accounts (which are denominated in SDRs), it was simplified. It is now based on a weighted average of only five different currencies: the dollar, the Deutschmark, the French franc, the pound sterling and the yen. The basket is revised every five years. The weights in the basket reflect the relative shares of countries in exports of goods and services and the relative shares of the five currencies in official reserve holdings.

Since the adoption of the First Amendment of the IMF's Articles of Agreement in 1969, the IMF has been authorized to allocate SDKs to member countries. Decisions to allocate (or cancel) SDKs require an 85 per cent majority vote of the Board of Governors and are made for "basic periods", which, unless otherwise decided, run for five consecutive years. Cumulative allocations to date total SDR 21.4 billion. SDR allocations are distributed in proportion to IMF members' quota shares. Because of considerable expansion in the IMF's membership since SDRs were last allocated in 1981, 38 of the IMF's 181 member countries have never received SDR allocations. Another 37 members have participated in some, but not all allocations.

SDRs are counted as a part of a country's international reserves, along with official holdings of gold, foreign exchange, and reserve position in the IMF. The share of SDRs in global holdings of nongold reserves has declined from 8.4 per cent at the end of 1972, to 6.5 per cent at the end of 1981, and to 2.3 per cent at the end of 1995.

Words you may need:

Special Drawing Rightспециальное право заимствования

reserve assetsрезервные активы

legal tenderзаконное платежное средство

revisev пересматривать

weightn вес

reserve holdingsрезервы

allocatev выделять, распределять

amendmentn поправка, исправление

consecutiveadj последовательный

to dateна сегодняшний день

totalv составлять, достигать

reserve positionрезервная позиция

b) Complete the sentences below with the information from the text.


1. The Special Drawing Right (SDR) is an international reserve asset... .

2. The SDR serves as a unit of account... .

3. The SDR has been used at times to denominate financial instruments but... .

4. ... was redefined in June 1974 as a basket of 16 currencies. 5. Since 1981, the SDR basket has consisted of... .

6. ... the IMF has been authorized to allocate SDRs to member countries.

7. Because of considerable expansion in the IMF's membership since SDRs were last allocated in 1981 ... .

8. SDRs are counted as a part of a country's international reserves ... .

9. The share of SDRs in global holdings of nongold reserves has declined ... .

Ex. 18. a) Read the text below quickly to find the names of the countries mentioned.

b) Reread the text carefully and underline all parts saying about the Paris Club.


Debt rescheduling is a form of debt reorganization in which debtors and creditors negotiate to defer payments of a principal and interest falling due in a specified interval for repayment on a new schedule.

Some countries find it almost impossible to service their external debts. Recently, rescheduling external debts has become a widely accepted practice. Debt rescheduling occurs at the Paris Club for government and private debt owed to official creditors and at the London Club for debt owed to commercial creditors.

The Paris Club is an informal forum where countries experiencing difficulties in paying their debts to governments and private institutions meet with their creditors to restructure these debts. The name might be quite misleading because in reality the Paris Club is not a club, nor is it a formal international organization. It has no offices, no secretariat, and above all, no charter. The Paris Club is an ad hoc institution with no legal status.

In part, the Paris Club's confidentiality policy has prevented it from becoming known to a wider public. Creditors refrain from releasing any information pertaining to their assessment of a given debtor's economic and financial situation or to the scope of debt relief granted. The onset of the international debt crisis in the early 1980s, however, brought public attention to the Paris Club and to its contribution to resolving the balance-of-payments disequilibria experienced by a growing number of developing countries and by some Central and Eastern European countries.

Over the years, the Paris Club has become a key instrument in implementing the international debt strategy. This strategy rests on two main pillars: internal reform and structural adjustment, supplemented by external financial assistance in the form of fresh money and debt relief. Despite the public's recent discovery of the Paris Club, this forum has existed since 1956, when Argentina agreed to meet in Paris with official creditors to find a mutually acceptable basis for rescheduling payments due on officially supported export credits. In the late 1950s and 1960s, Brazil, Chile, and Turkey sought similar Paris Club reschedulings. Since 1980, 54 countries have rescheduled the total of 186 debt agreements.

Words you may need:

debt reschedulingреструктурирование долга

to defer paymentsотсрочивать платежи

principaln сумма долга (на которую начисляется процент), капитальная сумма

falling dueнаступающий (о платеже)

schedulen график

to service debtsобслуживать долг

Paris ClubПарижский клуб

owev быть должным

London ClubЛондонский клуб

misleadingadj вводящий в заблуждение

ad hoc institutionспециальная (ад хок) организация

to prevent smb from (doing smth)мешать, препятствовать (кому-л. что-л. делать)

refrain (from)v воздерживаться (от)

pertaining toотносящийся к

debt reliefпомощь в погашении долга

onsetn начало

disequilibrian (pl) неустойчивость

rests on two pillarsпокоится на двух столпах

Ex. 19. a) Read the article below quickly to find the major points of criticism towards the IMF.

b) Reread the article to find the sentence describing the present-day relations between the IMF and the World Bank.


It was not only Brazil that ran up the white flag last week when it halted the defence of its currency on the world foreign exchanges. The defeat of Brazil was also a defeat for the International Monetary Fund, the Group of Seven and the ill-conceived set of policy recommendations which have ensured that a problem in South-East Asia has the potential to turn into a full-scale global crisis.

The orthodox approach insisted on by the IMF in country after country has proved a disaster. If it were a private firm, the IMF's board would have been sacked long ago.

There will doubtless be those who will say that there is no reason to reassess the policies which underpin the free market – deflation, austerity, high interest rates, privatization and capital liberalization.

But last week's events are a crushing blow to that orthodox approach. Their analysis of the crisis has been wrong from the start, and they have not the first idea of what to do now, apart from more of the same.

The IMF has a bankers' mentality. It deals with central banks and thinks of itself as a central bank. It is secretive, lacks transparency and has a fixation with narrowly defined indicators. The IMF's obsession with budget deficits, curbing inflation and financial liberalization has engendered a damaging short-termism that has held back long-term development.

Reducing budget deficits through public-spending cuts while simultaneously freeing up domestic capital markets has simply had the effect of raising debt-servicing costs, thereby crowding out investment in health and education.

There have been signs during the last 18 months of a growing fissure between the IMF's thinking and that of its sister organization – the World Bank. The bank's report on the Asian crisis concludes that insistence on pushing up interest rates was a crucial blunder that worsened the situation, and that it would have been better to have let currencies fall and keep interest rates low in order to keep economies moving forward.

Words you may need:

to run up the white flagвыбросить белый флаг

haltv остановить

disastern бедствие

deflationn дефляция

austerityn строгая экономия

fissuren трещина

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