Abstract
Abstract. In this paper, the author explores the balance sheet of the Exchange Stabilization Fund (ESF) over its first 85 years as a lens though which to analyze the fund. An accompanying spreadsheet workbook provides data from the annual balance sheet of the ESF since the fund’s inception in 1934. These data are available in electronic form for the first time, which will be of interest to those wishing to do quantitative analyses of its role in U.S. monetary policy.
Keywords. Exchange Stabilization Fund (ESF), Balance sheet, Assets, Liabilities, Gold, Foreign exchange intervention.
JEL. E52, E59, N12.
References
An Act to extend the time within which the powers relating to the stabilization fund and alteration of the weight of the dollar may be exercised, Public Law No. 75-1, ch. 5, January 23, 1937: Extended the life of the ESF to June 30, 1939.
An Act to extend the time within which the powers relating to the stabilization fund and alteration of the weight of the dollar may be exercised, Public Law 76-165, ch. 250, July 6, 1939: Extended the life of the ESF to June 30, 1941.
An Act to extend the time within which the powers relating to the stabilization fund and alteration of the weight of the dollar may be exercised, Public Law 77-142, ch. 265, June 30, 1941: Extended the life of the ESF to June 30, 1943, which it also set as the expiration date for the President’s power to vary the gold content of the dollar.
An Act to extend the time within which the powers relating to the stabilization fund and alteration of the weight of the dollar may be exercised, Public Law 78-42, ch. 76, April 29, 1943: Extended the life of the ESF to June 30, 1945.
An Act to authorize United States participation in increases in the resources of certain international financial institutions, to provide for an annual audit of the Exchange Stabilization Fund by the General Accounting Office, and for other purposes, Public Law 91-599, December 30, 1970, Section 42: Provided for the first Congressional audit of the ESF.
An Act to provide for amendment of the Bretton Woods Agreements Amendment Act, and for other purposes, Public Law 94-564, October 19, 1976: In effect officially ended the gold standard in accord with the IMF’s Second Amendment; required the ESF to submit an annual report to Congress, rather than just to the President as previously.
An Act to authorize the Secretary of the Treasury to invest public moneys, and for other purposes, Public Law 95-147, October 28, 1977: Forbade the ESF from lending to a foreign government or entity for more than six months in any twelve-month period, unless the President provides a written determination to the Congress.
Bloomfield, A.I. (1944). Operations of the American exchange stabilization fund. Review of Economics and Statistics, 26(2), 69-87. doi. https://doi.org/10.2307/1927695
Bretton Woods Agreements Act, Public Law 79-171, July 31, (1945). Accepted U.S. membership in the IMF and World Bank; established the National Advisory Council on International Monetary and Financial Problems; made the ESF permanent.
Bretton Woods Agreements Act Amendment, Public Law 87-490, June 19, 1962: Permitted U.S. purchases of gold or currency from the IMF to be routed through the ESF.
Bordo, Michael D., Owen F. Humpage, and Anna J. Schwartz. 2015. Strained Relations: U.S. Foreign-Exchange Operations and Monetary Policy in the Twentieth Century. Chicago: University of Chicago Press. [Retrieved from].
Coronavirus Aid, Relief, and Economic Security Act (CARES Act), Public Law 116-136, March 27, 2020, Section 4015: Suspended through the end of 2020 restrictions on using the ESF imposed by Public Law 110-343; allocated $500 billion through the ESF for making and backstopping loans to businesses.
Exchange Stabilization Fund Amendments Act, Public Law 95-612, November 8, 1978: Prohibited using the ESF to pay for administrative expenses and required monthly reporting to Congress of its agreements, transactions, and projected liabilities.
For consolidated current legislation, see U.S. Code, Title 12, Sections 5236, 5412; Title 22, Sections 262r-3, 286, 5411-5412; Title 31, Section 5302.
Gold Reserve Act of 1934, Public Law 73-87, January 30, 1934: Established a maximum gold content for the dollar of 60 percent of the previous official value; established the Exchange Stabilization Fund (ESF) for a term of up to three years.
Henning, C. Randall. 1999. The Exchange Stabilization Fund: Slush Money or War Chest? Policy Analyses in International Economics 57. Washington, D.C.: Institute for International Economics. (Prof. Henning has graphs similar to those here but no longer has the underlying data.) [Retrieved from].
International Monetary Fund. 1964. Annual Report. Washington, D. C.: International Monetary Fund. https://www.imf.org/external/pubs/ft/ar/archive/pdf/ar1964.pdf
International Monetary Fund. 2017. General and Special SDR Allocations. [Retrieved from].
Mexican Debt Disclosure Act of 1995, Title IV of Public Law 104-6, April 10, 1995: Required reporting connected with a recent ESF loan to Mexico.
Memorandum from Secretary of the Treasury Douglas Dillon to President John F. Kennedy, August 30, 1961: Proposed (and received) approval for allowing the ESF to invest in interest-earning assets.
Public Law 110–343, October 3, 2008, Division A, Title I, section 131: Forbade use of the ESF to backstop money market mutual funds, as the George W. Bush administration had recently done.
Schwartz, A.J. (1997). From obscurity to notoriety: A biography of the exchange stabilization fund, Journal of Money, Credit and Banking, 29(2), 135-153. doi. 10.2307/2953672
Special Drawing Rights Act of 1968, Public Law 90-349, June 19, 1968: Specified that Special Drawing Rights (SDRs) allocated to or acquired by the United States are resources of the ESF.
The accompanying spreadsheet workbook with data on the ESF balance sheet is here. [Retrieved from].
The ESF page on the U.S. Department of the Treasury Web site is here. [Retrieved from].
Treasury Department Order No. 170-4, April 26, 1957; Revision 1, October 15, 1962; Revision 2, February 8, 1963; Revision 3, January 7, 1964; Revision 4, August 9, 1972: Rules concerning disbursement of ESF funds.
Treasury Department Order No. 170-13, August 7, 1972: Rules concerning administrative expenses paid by ESF.
Treasury Department Order No. 237, April 7, 1975: Assignment of responsibility for management of ESF.
United States. Department of the Treasury. Exchange Stabilization Fund. 1954-present. Annual Report (Including Audit Report of the Audit Committee) for the year ended September 30, …. Washington, D.C.: Department of the Treasury. In the Treasury Library, HG3863.E2. Recent issues are on the Web site of the U.S. Department of the Treasury on the ESF reports page, cited above, and the page of the Treasury’s Office of the Inspector General, which conducts the audits.
United States. Department of the Treasury. 1934-1953. Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, … Washington, D.C.: Government Printing Office. (Contains balance sheet data on the Exchange Stabilization Fund before it started issuing a separately published report.) [Retrievedf rom].
