Mark,
-you asked-
"Would you know how the Exchange Stablization Fund is funded? "
ESF Financing
The ESF was structured to be self-financing. Its resources, which are held in both dollars and foreign currency, include its original Congressional appropriation and retained earnings. The Gold Reserve Act of 1934 initially funded the ESF with resources resulting from the devaluation of the dollar, in terms of gold. Congress appropriated $2 billion of the resulting valuation gain to the ESF; $1.8 billion of that was later used to fulfill the initial U.S. quota subscription to the IMF.
Currently, the New York Fed invests ESF foreign currency balances in instruments that yield market-related rates of return and have a high degree of liquidity and credit quality, such as securities issued by foreign governments. In addition to interest earned on assets, the ESF's balance sheet also includes gains or losses on exchange operations.
During fiscal year 1994, the ESF had net income of $2.4 billion, which raised its capital position (appropriated capital plus retained earnings) to $22.4 billion. As of March 31, 1995, total assets were $41.8 billion and included $25.3 billion in foreign currencies, $11.7 billion in SDRs, and $4.6 U.S. Government securities. The Treasury extended $12 billion through the ESF in short- and medium-term credits to Mexico in the first seven months of 1995, in response to the devaluation of the Mexican peso.
ny.frb.org
Hope this answers your question...
Craig |
