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European Communities International Agreements |
Agreement in the form of an exchange of letters between
the European Economic Community and the Bank for International
Settlements
concerning the mobilization of claims held by the
Member States under the medium-term financial assistance
arrangement
Official Journal L 316 , 10/11/1978 P. 0022 - 0023
AGREEMENT in the form of an exchange of letters between the European Economic Community and the Bank for International Settlements concerning the mobilization of claims held by the Member States under the medium-term financial assistance arrangements
A. Letter from the Bank for International Settlements
Sir,
The BIS could conclude stand-by credit agreements with the creditor countries' central banks if they should so request.
These agreements could be concluded up to the total amount of the contribution paid into the mechanism by the creditor country, with an overall limit of 2 725 million units of account, corresponding to half of the total of future commitment ceilings of the member countries.
The practical details of each stand-by agreement would be determined by agreement between the BIS and the central bank in question. However, certain conditions, which the BIS would be prepared to apply, can be indicated already:
The initial commitment of the BIS for each stand-by credit would be for two years with the option of renewal for other periods, the total not to exceed five years.
On the opening of credits, and whenever they are renewed, the BIS would take a Commission. It would also be understood that, in order to allow it to carry out the necessary adjustments to its own liquidity, the first drawings would not take place until one month after the conclusion of the stand-by agreement. Drawings would be in the currencies available to the BIS at the time the agreements were concluded, most probably in US dollars ; they would be for periods to be negotiated in the light of the Bank's resources, probably three or six months. The conditions would be equivalent to those applied by the BIS at the time for transactions concluded on similar terms, i.e. at close to market rates. Normally, these rates should be only slightly above Libor. However, if the BIS should itself have to have recourse to the market to procure the necessary funds, the rate applied could reach a maximum equivalent to Libor plus an appropriate margin.
I should be obliged if you would inform me whether the Council of the European Communities is in agreement with the above.
Please accept, Sir, the assurance of my highest consideration.
For the Bank for International Settlements
B. Letter from the Community
Sir,
I have the honour to acknowledge receipt of your letter of today's date, which reads as follows:
"The BIS could conclude stand-by credit agreements with the creditor countries' central banks if they should so request.
These agreements could be concluded up to the total amount of the contribution paid into the mechanism by the creditor country, with an overall limit of 2 725 million units of account, corresponding to half of the total of future commitment ceilings of the member countries.
The practical details of each stand-by agreement would be determined by agreement between the BIS and the central bank in question. However, certain conditions, which the BIS would be prepared to apply, can be indicated already:
The initial commitment of the BIS for each stand-by credit would be for two years with the option of renewal for other periods, the total not to exceed five years.
On the opening of credits, and whenever they are renewed, the BIS would take a Commission. It would also be understood that, in order to allow it to carry out the necessary adjustments to its own liquidity, the first drawings would not take place until one month after the conclusion of the stand-by agreement. Drawings would be in the currencies available to the BIS at the time the agreements were concluded, most probably in US dollars ; they would be for periods to be negotiated in the light of the Bank's resources, probably three or six months. The conditions would be equivalent to those applied by the BIS at the time for transactions concluded on similar terms, i.e. at close to market rates. Normally, these rates should be only slightly above Libor. However, if the BIS should itself have to have recourse to the market to procure the necessary funds, the rate applied could reach a maximum equivalent to Libor plus an appropriate margin.
I should be obliged if you would inform me whether the Council of the European Communities is in agreement with the above."
I have the honour to inform you that the Council of the European Communities is in agreement with the contents of your letter.
Please accept, Sir, the assurance of my highest consideration.
On behalf of the Council of the European Communities
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URL: http://www.worldlii.org/int/other/treaties/EUTSer/1978/43.html