"Gold Tranche" (Reserve Tranche) refers to

“Gold Tranche” (Reserve Tranche) refers to

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a loan system of the World Bank

one of the operations of a Central Bank

a credit system granted by WTO to its members

a credit system granted by IMF to its members

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UPSC IAS – 2020

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“Gold Tranche” or “Reserve Tranche” is a term used in the context of the International Monetary Fund (IMF). It refers to the portion of a member country’s quota in the IMF that can be drawn upon at any time without any conditions or economic policy reforms being required. It is essentially a reserve asset or credit line that a member country holds with the IMF, denominated in Special Drawing Rights (SDRs). This system allows member countries to access funds in times of balance of payments needs.

– Gold Tranche or Reserve Tranche is associated with the IMF.
– It represents an unconditional drawing right for member countries.
– It is part of a country’s quota contribution to the IMF.

Each member country contributes a quota to the IMF, paid partly in reserve assets (like SDRs or major currencies) and partly in the country’s own currency. The portion paid in reserve assets plus any borrowing by the IMF from the member country constitutes the reserve tranche position. A country can draw on its reserve tranche at any time it represents that it has a balance of payments need, without having to agree to conditionality.

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