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Imf Sets 0.05% Floor On Interest Rate On Special Drawing Right

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http://www.bloomberg.com/news/2014-10-24/imf-sets-0-05-floor-on-interest-rate-on-special-drawing-right.html

The International Monetary Fund is setting a 0.05 percent floor on the interest rate used to determine borrowing costs for some of its loans.

The executive board modified rules today to make the change, according to a statement today in Washington.

The IMF’s Special Drawing Right, based on a basket of the dollar, yen, euro and pound, is the fund’s unit of account that serves as a supplemental reserve asset and was designed to improve global liquidity.

The SDR interest rate was quoted on the IMF website at 0.03 percent today compared with 0.13 percent in April and more than 3 percent in August 2008, before central banks slashed borrowing costs to zero to boost growth in the aftermath of the financial crisis.

The rate will be 0.05 percent on Oct. 27, the IMF said.

The board also approved changing the rounding convention for calculating the SDR rate to three decimal points from two, the statement said.

..

A floor will prevent the SDR rate from going negative, in the event that money market interest rates on some of the currencies in the underlying basket themselves go negative, an IMF official told reporters on condition of anonymity. The fund has no legal basis for charging a negative rate on SDRs.

So how long before they to 4 decimal places?

Next it will be 0.005???

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A floor will prevent the SDR rate from going negative, in the event that money market interest rates on some of the currencies in the underlying basket themselves go negative, an IMF official told reporters on condition of anonymity.

The open and transparent announcements will be made in due course.

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