International reserves

Gold
Owned or in the custody of monetary authorities as part of foreign exchange reserves. To qualify as reserve assets, gold deposits must be readily available on demand.

Special drawing rights
Rights allocated by the International Monetary Fund to strengthen the foreign exchange reserves of its member states. Special Drawing Rights (SDRs) are allocated in proportion to the countries’ respective quotas in the fund. Each member state’s quota is assigned on the basis of its relative share size in the world economy. The drawing rights represent a full and unconditional right of their holders to a foreign currency loan or other foreign currency assets from the International Monetary Fund. Member states can sell their quota to each other. A liability called the counterpart to the International Monetary Fund is recorded against the capitalised quota.

Currency and deposits consist of banknotes and coins in circulation, plus deposits. Deposits
Currency and deposits consist of banknotes and coins in circulation, plus deposits. Deposits are standardised, non-negotiable agreements offered by deposit-taking corporations. The term of deposits can vary, depending on the agreement. Deposits generally imply that the debtor is obliged to return the principal to the investor. They can be held in central banks or in deposit-taking corporations.

Reserve assets are foreign assets that are always available to monetary authorities and under their control. Reserve assets must be foreign-denominated assets, claims against nonresidents, and assets that actually exist. Potential assets are excluded.

A resident is any individual and legal entity permanently residing in Iceland, irrespective of nationality. Students and embassy employees are exempt from the residency requirement. Therefore, Icelandic students and their families who reside abroad are considered residents, and foreign embassy employees are considered non-residents. Non-residents shall mean all parties except residents.

Contractual foreign currency obligations scheduled to come due during the 12 months ahead. Payments of short-term foreign obligations are classified into three sub-periods on the basis of remaining maturity. Included are foreign currency-denominated obligations of the Central Bank and other central government (excluding social security) to residents or non-residents. Short-term obligations include those with an original maturity of one year or less and those with longer original maturities whose remaining maturity is one year or less. Also included are payments falling due during the next twelve months on obligations with an original maturity of more than one year.

Possible payments due to contractual obligations that may affect foreign currency assets. These are foreign currency-denominated obligations of the Central Bank and the central government (excluding social security) to residents and non-residents that are contingent upon exogenous events and are by definition off-balance-sheet activities. There are two types of contingent flows: either they emanate from potential assets and liabilities such as undrawn, unconditional credit lines and foreign exchange guarantees. Otherwise they arise from the authorities’ positions in options contracts, if and when the options are exercised.

Credit lines that are negotiated with foreign banks but have not been utilised. If credit lines need to be utilised, little or no notice is required to draw on them. On the one hand, there are credit lines obtained from other banks and, on the other hand, credit lines that other banks have obtained from the Central Bank.

SDR is a basket of international currencies defined by the IMF. The basket currently includes five currencies. the US dollar (USD), pound sterling (GBP), euro (EUR), Yuan (CNY) and yen (JPY). The composition of the basket is reviewed every five years by the IMF. The US dollar value of the SDR is calculated by the IMF on the basis of the exchange rates of the currencies in the basket as quoted at noon each day in the London market. Markets and market operations of the Central Bank of Iceland fixes the exchange rate of the SDR against the Icelandic króna.