[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"doc-detail-324816-en":3,"detail-sidebar-cat-0-en-105":31,"doc-seo-324816-105":80},{"code":4,"msg":5,"data":6},0,"success",{"doc_id":7,"user_id":8,"nickname":9,"user_avatar":10,"doc_module":4,"category_id":11,"category_name":12,"doc_title":13,"doc_description":14,"doc_content":15,"file_id":16,"file_url":17,"file_type":18,"file_size":19,"view_count":20,"is_deleted":4,"is_public":21,"is_downloadable":21,"audit_status":21,"page_count":22,"language":23,"language_code":24,"site_id":25,"html_lang":24,"table_of_contents":26,"faqs":27,"seo_title":28,"seo_description":14,"update_tm":29,"read_time":30,"preview_page_count":4},324816,1374391974468,"Eden","https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0",8,"Research & Report","The Exchange Stabilization Fund:How It Works","This Economic Commentary explains how the Exchange Stabilization Fund (ESF) functions and why assessing its available resources requires more than reading the reported “total assets” figure on the ESF balance sheet. It reviews the ESF’s origins, governance, and expansion, then analyzes how key activities—especially foreign-exchange intervention and financial assistance—affect the true amount of resources. It also discusses how warehousing and swap lines must be incorporated to measure ESF capacity accurately.","By Wlliam P.Osterberg and James B.Thomson  \nIhe increased turmoilin intemationalfinancial markets,starting with the Asiancrises of 1997,has led to calls for finan-cial assistance from the wealthier nations.In December 1997.the United States an-nounced aS5bllion commitment towardan intemational package of financial as-sistance for South Korea.Twomonthsearlier the United States pledgedS3 bil-lion for assistance to Indonesia.In bothinstances,the Exchange StabilizationFund (ESF)was to be involved.  \nEstablished by Congress in 1934 to helpstabilize the international value of thedollar,the ESF received litle publicattention until it was used in the provi-sion of financial assistance to Mexico inthe wake of the peso crisis of 1995.Indeed,greater scrutiny may have beeninevitable given the ESF's expansionbeyond its original mandate.Despite therecent attention.the fullrange of ESFactivities and the actual amountof avail-able ESF resources are not well under-stood.This impedes an informed publicdiscussion of ESFoperations.  \nA major goul of this Econonic Comnel-tary is to facilitate accurate assessmentsof the amount of resources available tothe ESE.First.in order to understand theuses of ESF resources.weprovide anoverview of ESF operations.Second,weexamine theESFbalance sheet to showhow \"total assets\"is apoor measure oftheresources available to the ESF for oneof is major activities,foreign-exchangeintervention.Third,we discuss how anymeasure of ESF resources must takeaccount of warehousing and swap lines.Finally,we suggest a better procedure forassessing the amount of resources avail-able to the ESF.  \n# The Exchange Stabilization Fund:How It Works\n\n## ■ An Overview of the ESFThe ESF began operationson April 27,1934,with capital of S2 billion.Initially.\n\nS1.8 billion of the ESFs reserves weremaintained in the Treasury's goldaccount.The remaining S200millionwas deposited in aspecial account at theFederal Reserve Bank of New York asthe working balance for investing ingold and foreign exchange.²The work-ing fund of the ESF has expanded overtime,reaching as high as S42billion inmid-1995.³As documented by Schwartz(1997).most of the growh in ESF assetshas occured since 1960and has com-prised increases in foreign exchange andsecurities.Asof June 30.1998.almost60 percent of the asset total had beenfinanced by cumulative net income,mainly reflecting interest earnings andcapital gains on forcign currencies.  \nThe Giold Reserve Act of 1934excludedthe ESF from the congressional appro-priations process andexplicitly autho-rized it to operate without congressionaloversight and accountability.In otherwords.Congress gave exclusive controlof the ESF to the executive branch.AIldecisions regarding the ESF are made bythe Secretary of the Treasury,subject tothe approval of the President.  \nLegislative chainges in the late 1970sreduced somewhat the secrecy under whichthe ESF operates and made it more ac-countable to the Congress.For instance.since 1979 the administrative expenses ofthe ESF have been subject to the budgetprocessMoreover.a 1977 amendment toSection 10 of the Gold Reserve Act pro-vides that:  \nIncreasingly controversial,theExchange Stabilization Fund isused to influence the internationalvalue of the U.S.dollar and to pro-vide aid to foreign countries.Thedebate surrounding the Fund willbecome more informed,suggest theauthors,when observers understandhow to calculate the total amount ofresources available to the Fund.ThisEconomie Commentary explains howthe ESF's halance sheet figures musthe adjusted to produce an accurateaccount of those resources.  \n.….a loan orcredlit to aforeign enity orgovernment ofa forign country mayhemade for more than6 months ina 12-mcuth period only if zhe Presidenr givesCongress a writen statemeu that uniqueor emergencycircumstunces nequire thelnan or credit befor more than 6momths137U.S.C.5302(b)).”  \nFinally.1978legislation requires theTreasury to provide monthly statementsofESFactivities to the House and Sen-ate Bankin","cbCaifQQ4jcFeyO2","https://ap.wps.com/l/cbCaifQQ4jcFeyO2","pdf",1141973,7,1,5,"English","en",105,"# The Exchange Stabilization Fund:How It Works\n## An Overview of the ESF\n## The Size of the ESF","[{\"question\":\"What is the main purpose of the ESF described in the document?\",\"answer\":\"The document describes the ESF as being used to influence the international value of the U.S. dollar and to provide financial assistance to foreign countries.\"},{\"question\":\"Why is “total assets” on the ESF balance sheet not a sufficient measure of ESF resources?\",\"answer\":\"Because several ESF operations involve assets that may not translate into available resources in the way the balance-sheet total suggests, and important factors such as interventions, warehousing, and swap lines must be accounted for.\"},{\"question\":\"How does the document argue that foreign-exchange intervention affects ESF resource measurement?\",\"answer\":\"It explains that the relevant resource measure depends on whether foreign exchange is being bought or sold, since buying requires dollar assets while sales are financed through international reserves, changing the ESF’s composition of securities and foreign-exchange holdings.\"}]","The Exchange Stabilization Fund:How It Works | PDF",1789968946,13,{"code":4,"msg":5,"data":32},[33,38,43,48,52,57,61,64,69,72,76],{"id":21,"doc_module":4,"doc_module_name":34,"category_name":35,"show_sort_weight":36,"slug":37},"Document","Story & 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is the main purpose of the ESF described in the document?","Question",{"text":128,"@type":129},"The document describes the ESF as being used to influence the international value of the U.S. dollar and to provide financial assistance to foreign countries.","Answer",{"name":131,"@type":126,"acceptedAnswer":132},"Why is “total assets” on the ESF balance sheet not a sufficient measure of ESF resources?",{"text":133,"@type":129},"Because several ESF operations involve assets that may not translate into available resources in the way the balance-sheet total suggests, and important factors such as interventions, warehousing, and swap lines must be accounted for.",{"name":135,"@type":126,"acceptedAnswer":136},"How does the document argue that foreign-exchange intervention affects ESF resource measurement?",{"text":137,"@type":129},"It explains that the relevant resource measure depends on whether foreign exchange is being bought or sold, since buying requires dollar assets while sales are financed through international reserves, changing the ESF’s composition of securities and foreign-exchange holdings.","https://schema.org",{"og:url":100,"og:type":140,"og:title":13,"og:site_name":111,"og:description":14},"article",{"robots":142,"canonical":100},"index,follow",{"doc_id":7,"site_id":25},1790131864]