Board of Governors of the Federal Reserve System

Data Dictionary

Item Number J654

Call confidentiality applies to FFIEC 031/041.

Data Description:

Special Drawing Rights (SDRs) are issued by the International Monetary Fund (Fund) to its members in proportion to each member's quota in the Fund at the time of issuance. SDRs serve as a supplement to international monetary reserves and may be transferred from one national monetary authority to another. Under the law providing for U.S. participation in the SDR system, the Secretary of the Treasury is authorized to issue SDR certificates (broadly comparable with gold certificates) to the Federal Reserve Banks. The Banks are required to purchase them for the purpose of financing SDR acquisitions or for financing exchange stabilization operations.

The Treasury, when it wishes to monetize a specific amount of SDRs, authorizes and requests the New York Reserve Bank to credit a special account of the Secretary of the Treasury with the total amount of such monetization and to debit the Bank's SDR certificate account by a corresponding amount. The Board allocates the SDR certificate transactions among all 12 Federal Reserve Banks in proportion to the net Federal Reserve notes outstanding in each District at the end of the preceding year. Each of the other Federal Reserve Banks pays for its share of the SDR certificates through its Interdistrict Settlement account. Each of the eleven Banks, therefore, has an increase in one asset (SDR certificates) offset by a decline in another balance sheet asset. The New York Reserve Bank has an increase in its deposit liabilities (special account of the Secretary of the Treasury) matched by increases in two assets (SDR certificates--to the extent of its share in overall distribution effected by the Board--and Interdistrict Settlement account). In addition, pursuant to an agreement between the Federal Reserve and the U.S. Treasury made in the 1960s, whenever the SDR account reaches a level of surplus, the Treasury authorizes and requests the demonetization of SDRs. When this occurs, the New York Reserve Bank debits the special account of the Secretary of the Treasury with the total amount of such demonetization and credits the Bank's SDR account by a corresponding amount. As in a monetization, the Board allocates these balances among all 12 Federal Reserve Banks.

The New York Reserve Bank maintains an account for each Reserve Bank entitled "Special Drawing Rights certificate account." Amounts deposited with New York are distributed on the day of deposit rounded to the nearest million, and payment is made by direct entry to each Bank's Interdistrict Settlement account; i.e., New York's account is increased and accounts of other Reserve Banks are decreased. Entries in the opposite direction are made when Treasury reduces the total.

An electronic message is distributed to all Reserve Banks showing each Bank's share. Upon receipt of this message, each Bank other than New York, debits the SDR certificate account and credits the Interdistrict Settlement account on its books. New York credits the account by the amount distributed and debits the Interdistrict Settlement account.

Each Bank pledges the full amount in the Special Drawing Rights certificate account as collateral for Federal Reserve notes under a continuing pledge agreement.