Review of the Adequacy of the Fund's Precautionary Balances
January 26, 2016
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Format: Chicago
Summary
The framework provides an indicative range for the target for precautionary balances linked to credit outstanding, and allows for judgment in setting this target. A reserve coverage ratio of 20-30 percent draws on approaches in other IFIs, adapted to the circumstances of the Fund, and is a guide for determining the target. At the same time, Directors have emphasized the continued importance of judgment and Board discretion in light of a broad assessment of financial risks facing the Fund.
Subject: Credit risk, Financial risk, Fund, Fund reserves, Net income of Fund, Rate of charge, Reserves adequacy, Risk management
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