Sec. 2. Findings

266 words·~1 min read·/bill/117/hr/1568/ih/section-2

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The Congress finds as follows: The allocation of Special Drawing Rights

(SDRs)through the International Monetary Fund

(IMF)creates unconditional liquidity for IMF member countries. According to Article XVIII of the Articles of Agreement of the IMF, allocations of SDRs shall seek to meet the long-term global need in reserve assets. SDRs are allocated in proportion to the quotas of IMF members, such that the G20 alone is entitled to approximately two-thirds of a general allocation. At the same time, the Board of Governors of the Federal Reserve System has swap line arrangements with the central banks of eight G20 members, including the European Central Bank, the Bank of Japan, and the Bank of England, for the purpose of providing sufficient liquidity. The size of SDR allocations has expanded dramatically, rising from 9,300,000,000 SDRs in 1970–1972, to 12,100,000,000 SDRs in 1979–1981, to 204,000,000,000 SDRs in 2009, with proposals for a new, unilateral allocation that bypasses congressional authorization in an amount of approximately 450,000,000,000 SDRs. Under current law, the Secretary of the Treasury is able to bypass Congress and approve an allocation of SDRs in a manner that provides unconditional liquidity in the following approximate amounts: $41,700,000,000 to the People’s Republic of China; $17,600,000,000 to the Russian Federation; $4,900,000,000 to the Islamic Republic of Iran, and $5,000,000,000 to Venezuela. In addition, current law permits allocations in these amounts to be made in successive years that span two basic periods. In the 98th Congress, the House of Representatives passed the bipartisan International Recovery and Financial Stability Act, which would have prohibited new allocations of SDRs without congressional authorization.