Reserve Tranche

DEFINITION of 'Reserve Tranche'

The proportion of the required quota of currency that each International Monetary Fund (IMF) member country must provide to the IMF, but can designate for its own use. The reserve tranche portion of the quota can be accessed by the member nation at any time, whereas the rest of the member's quota is typically unaccessible.

BREAKING DOWN 'Reserve Tranche'

Because IMF member nations have many different national currencies, the IMF denominates its members' quotas in terms of special drawing rights (SDRs), which is essentially a specified basket of major international currencies.

A certain proportion of a member country's quota is specified as its reserve tranche. The member country can access its reserve tranche funds at its discretion, and is not under an immediate obligation to repay those funds to the IMF. Member nation reserve tranches are typically 25% of the member's quota.

RELATED TERMS
  1. Credit Tranche

    A system used by the International Monetary Fund (IMF) to govern ...
  2. Quota

    A government-imposed trade restriction that limits the number, ...
  3. International Monetary Fund - IMF

    An international organization created for the purpose of standardizing ...
  4. Activity Quota

    A minimum level of sales-oriented actions that must be met by ...
  5. Individual Transfer Quota - ITQ

    A quota, imposed on individuals or firms by a governing body, ...
  6. Sequential Pay CMO

    A type of collateralized mortgage obligation (CMO) in which there ...
Related Articles
  1. Markets

    What Is a Quota?

    In business, quota usually refers to the sales target for a salesperson or a sales team.
  2. Markets

    An Introduction To The International Monetary Fund (IMF)

    Chances are you've heard of the IMF. But what does it do, and why is it so controversial?
  3. Markets

    Can The IMF Solve Global Economic Problems?

    The IMF is an important tool to help struggling countries, but it's not without its problems.
  4. Markets

    What is the International Monetary Fund?

    The International Monetary Fund fosters global monetary cooperation and sustainable economic growth.
  5. Investing

    What are Tranches?

    Tranches often describe specific classes of bonds within a security that hold different degrees of risks and maturities.
  6. Trading

    What Are IMF Special Drawing Rights?

    Technically, the SDR is neither a currency, nor a claim on the IMF itself.
  7. Investing

    What Are Tranches?

    “Tranche” is a French word that refers to a slice.
  8. Investing

    Why Are Mortgage Rates Increasing?

    Learn how the secondary mortgage market and investor demand affect the cost of home ownership.
  9. Markets

    Just How Vulnerable is the Global Economy?

    Is the global economy recovering or faltering? Perhaps the IMF knows the answer.
  10. Markets

    Macroeconomics: International Trade

    By Stephen Simpson International trade is the exchange of goods, services and capital across national borders. It is a multi-trillion dollar activity, central to the GDP of many countries, and ...
RELATED FAQS
  1. How is the International Monetary Fund financed?

    Understand the purpose that the International Monetary Fund (IMF) was created for, and learn how the organization obtains ... Read Answer >>
  2. Do financial advisors need to meet quotas?

    Learn why financial advisors who receive guaranteed salaries from their employers usually have quotas, and understand what ... Read Answer >>
  3. How do externalities affect equilibrium and create market failure?

    Learn about the responsibilities of the International Monetary Fund and its functions regarding the international monetary ... Read Answer >>
  4. What are the advantages and disadvantages of the International Monetary Fund?

    Learn about some of the main advantages and disadvantages of the International Monetary Fund and why the IMF's mission is ... Read Answer >>
  5. What is the purpose of the International Monetary Fund?

    Read about the stated goals of the International Monetary Fund, which acts as an economic adviser and lender of last resort ... Read Answer >>
  6. Who bears the risk of bad debts in securitization?

    Bad debts arise when borrowers default on their loans. This is one of the primary risks associated with securitized assets, ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center