) Distinguish between Gold tranche and Credit tranche.
Answers
Explanation:
Reserve tranche is the component of a member country's quota with the IMF that is in the form of gold or foreign currency. Hence this is called as reserve tranche or gold tranche. The remaining 75% can be in domestic currencies and it is called credit tranche.
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Answer:
Gold Tranche:
Member countries have an absolute claim on the IMF upto the amountof gold subscriptions they have made. In operational terms, they can draw this amount (= 25% of their quota) from IMF any time.
This is called ‘reserve tranche’ or “gold tranche” and is treated as the reserve of the country concerned. However, this sum is reimbursed to the IMF within a specified period varying from 3 months to 5 years.
Credit Tranches :
Any member can unconditionally borrow the part of its quota which it has contributed in the form of SDRs or foreign currency.
When it can borrow upto 100% of its quota in four futher tranches it is called credit tranches. (Tranche means a ‘slice’