Wed., October 07, 2009 Israel opening its wallet to the IMF
During September, the Bank of Israel bought $140 million worth of currency from the International Monetary Fund.
Technically the purchase was of 100 million SDR, which stands for special drawing rights - a sort of international currency based on a basket of four key international currencies, or the ..."international reserve asset," in official-speak.
SDRs can be exchanged for freely usable currencies. Yesterday morning, Finance Minister Yuval Steinitz told the IMF conference in Turkey that Israel supports the latest G20 proposal, to increase the resources available to the IMF in order to support emerging markets and developing nations.
"Israel wants to contribute to this important mission," Steinitz said. "We have therefore decided to take part in two important financing programs recently declared:
*the New Arrangement to Borrow and
*the Voluntary SDR Allocation."
That means, Steinitz went to on to explain, that the IMF can tap Israel for up to 500 million SDR. The money would come from the Bank of Israel's foreign currency reserves. Also, Israel would be required to acquire its SDR allocation, again using its foreign currency reserves, Steinitz said.
Yesterday we learned that the Bank of Israel had already carried out part of the acquisition in the form of the 100 million SDRs, the central bank reported. Since one SDR is worth $1.40, Steinitz's commitment for Israel to buy 500 million SDRs means that the Bank of Israel will be releasing $700 million from its foreign currency reserves.
Also, the Bank of Israel will be investing another billion dollars from its reserves in the NAB borrowing agreement. So all in all, Israel is lending the IMF $1.7 billion.
http://www.haaretz.com/hasen/spages/1119386.html
