Exchange Stabilization Fund - The Exchange Stabilization Fund (ESF) consists of three types of assets: U.S. dollars, foreign currencies, and Special Drawing Rights (SDRs), which is an international reserve asset created by the International Monetary Fund. The financial statement of the ESF can be accessed at "Reports" or "Finances and Operations." The ESF can be used to purchase or sell foreign currencies, to hold U.S. foreign exchange and Special Drawing Rights (SDR) assets, and to provide financing to foreign governments. All operations of the ESF require the explicit authorization of the Secretary of the Treasury ("the Secretary"). The Secretary is responsible for the formulation and implementation of U.S. international monetary and financial policy, including exchange market intervention policy. The ESF helps the Secretary to carry out these responsibilities. By law, the Secretary has considerable discretion in the use of ESF resources. The legal basis of the ESF is the Gold Reserve Act of 1934. As amended in the late 1970s, the Act provides in part that "the Department of the Treasury has a stabilization fund …Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities. Federal Reserve @ http://www.treasury.gov/resource-center/international/ESF/Pages/esf-index.aspxJuly 15, 2011
Treasury takes last-ditch measure to stay solvent
Washington - The Treasury said on Friday it would take the last step at its disposal to continue borrowing money in capital markets as Congress battles over raising the country's debt ceiling.
The previously announced decision to stop investments into the Exchange Stabilization Fund, a pool of money set aside as a contingency for possible instability in currency markets, will give the Treasury an additional $23 billion of wiggle room in spending.
"Congress must enact a timely increase of the debt ceiling," the Treasury said in a statement.
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July 15, 2011
Treasury To Suspend Reinvestment Of Exchange Stabilization Fund
Washington - The Treasury Department said Friday that it would take the final of four previously announced steps to keep the U.S. under its debt ceiling.
The Treasury said it will suspend reinvestment of the Exchange Stabilization Fund. And it again urged Congress to raise the borrowing limit. The deadline is August 2.
The U.S. reached the debt limit in mid-May but the Treasury used certain measures to extend its ability to meet the nation's obligations until August 2.
The measures included suspending issuance of state and local government series securities, a debt-issuance suspension period for the Civil Service Retirement and Disability Fund, and suspending reinvestment of Treasurys held as investments by the Government Securities Fund for the federal employees' thrift plan.
The final of the four measures was suspending reinvestment of the ESF, created as a way to stabilize international financial markets.
The Treasury has in the past suspended daily reinvestment of Treasury securities held in the fund, using the measure during debt-limit impasses in 1996, 2003, 2004, and 2006.
"Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund," said Jeffrey Goldstein, Treasury undersecretary for domestic finance. "In order to prevent a default on the nation's obligations, Congress must enact a timely increase of the debt ceiling."
Negotiators are trying to reach a deal to cut the deficit and raise the government's borrowing limit.
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107151546dowjonesdjonline000507&title=treasury-to-suspend-reinvestment-of-exchange-stabilization-fund
"Today, as previously announced, the Treasury Department will suspend reinvestment of the Exchange Stabilization Fund," said Jeffrey Goldstein, Treasury undersecretary for domestic finance. "In order to prevent a default on the nation's obligations, Congress must enact a timely increase of the debt ceiling."
Negotiators are trying to reach a deal to cut the deficit and raise the government's borrowing limit.
http://www.nasdaq.com/aspx/stock-market-news-story.aspx?storyid=201107151546dowjonesdjonline000507&title=treasury-to-suspend-reinvestment-of-exchange-stabilization-fund
