“Gold Tranche” (Reserve Tranche) refers to
[UPSC Civil Services Exam – 2020 Prelims]
(a) a loan system of the World Bank
(b) one of the operations of a Central Bank
(c) a credit system granted by WTO to its members
(d) a credit system granted by IMF to its members
Answer: (d)
Explanation:
- The International Monetary Fund (IMF) is financed through contributions from its member countries based on their allocated quotas.
- The reserve tranche refers to a designated portion of a member country’s quota held by the IMF. This portion can be accessed by the member country at any time without being subjected to conditions or service fees.
- The reserve tranche serves as an emergency account for member countries, allowing them to withdraw a portion of their quota freely and without incurring interest charges.
- However, if a member country wishes to withdraw an amount beyond the initial 25% of its reserve tranche, it may require permission from the IMF and be subject to a service fee.
