How does it work in this world of smoke and mirrirs...

The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets—gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.  The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. As of March 17, 2015, 204 billion SDRs were created and allocated to members (equivalent to about $280 billion).  Only a few years after the creation of SDRs, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by creditworthy governments. Both of these developments lessened the need for SDRs. However, more recently, the 2009 SDR allocations totaling SDR 182.6 billion have played a critical role in providing liquidity to the global economic system and supplementing member countries’ official reserves amid the global financial crisis. The SDR is neither a currency, nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and some other international organizations...

IMF members often need to buy SDRs to discharge obligations to the IMF, or they may wish to sell SDRs in order to adjust the composition of their reserves. The IMF may act as an intermediary between members and prescribed holders to ensure that SDRs can be exchanged for freely usable currencies. For more than two decades, the SDR market has functioned through voluntary trading arrangements. Under these arrangements a number of members and one prescribed holder have volunteered to buy or sell SDRs within limits defined by their respective arrangements. Following the 2009 SDR allocations, the number and size of the voluntary arrangements has been expanded to ensure continued liquidity of the voluntary SDR market. The number of voluntary SDR trading arrangements now stands at 32, including 19 new arrangements since the 2009 SDR allocations.

In the event that there is insufficient capacity under the voluntary trading arrangements, the IMF can activate the designation mechanism. Under this mechanism, members with sufficiently strong external positions are designated by the IMF to buy SDRs with freely usable currencies up to certain amounts from members with weak external positions. This arrangement serves as a backstop to guarantee the liquidity and the reserve asset character of the SDR...

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Today the SDR basket consists of the euro, Japanese yen, pound sterling, and U.S. dollar. The value of the SDR in terms of the U.S. dollar is determined daily and posted on the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.  The basket composition is reviewed every five years by the Executive Board, or earlier if the IMF finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (in November 2010), the weights of the currencies in the SDR basket were revised based on the value of the exports of goods and services, and the amount of reserves denominated in the respective currencies that were held by other members of the IMF. These changes became effective on January 1, 2011. In October 2011, the IMF Executive Board discussed possible options for broadening the SDR currency basket. Most directors held the view that the current criteria for SDR basket selection remained appropriate. The next review is currently scheduled to take place by the end of 2015.   Under its Articles of Agreement (Article XV, Section 1, and Article XVIII), the IMF may allocate SDRs to member countries in proportion to their IMF quotas. Such an allocation provides each member with a costless, unconditional international reserve asset. The SDR mechanism is self-financing and levies charges on allocations which are then used to pay interest on SDR holdings. If a member does not use any of its allocated SDR holdings, the charges are equal to the interest received. However, if a member's SDR holdings rise above its allocation, it effectively earns interest on the excess. Conversely, if it holds fewer SDRs than allocated, it pays interest on the shortfall. The Articles of Agreement also allow for cancellations of SDRs, but this provision has never been used. The IMF cannot allocate SDRs to itself or to other prescribed holders.  General allocations of SDRs have to be based on a long-term global need to supplement existing reserve assets. Decisions on general allocations are made for successive basic periods of up to five years, although general SDR allocations have been made only three times. The first allocation was for a total amount of SDR 9.3 billion, distributed in 1970-72, the second—for SDR 12.1 billion—distributed in 1979-81, and the third—for SDR 161.2 billion—was made on August 28, 2009. Separately, the Fourth Amendment to the Articles of Agreement became effective August 10, 2009 and provided for a special one-time allocation of SDR 21.5 billion. The purpose of the Fourth Amendment was to enable all members of the IMF to participate in the SDR system on an equitable basis and rectify the fact that countries that joined the IMF after 1981—more than one fifth of the current IMF membership—never received an SDR allocation until 2009.   The 2009 general and special SDR allocations together raised total cumulative SDR allocations to SDR 204 billion.  The SDR interest rate provides the basis for calculating the interest charged to borrowing members, and the interest paid to members for the use of their resources for regular (non-concessional) IMF loans. It is also the interest paid to members on their SDR holdings and charged on their SDR allocation. The SDR interest rate is determined weekly and is based on a weighted average of representative interest rates on short-term debt instruments in the money markets of the SDR basket currencies.

The IMF's World Economic Outlook forecast that rich economies will clock up respectable growth of 2.4pc this year after 1.8pc in 2014 as fiscal austerity fades and quantitative easing lifts the eurozone off the reefs, but there will be no return to the glory days of the pre-Lehman era.  "Potential growth in advanced economies was already declining before the crisis. Ageing, together with a slowdown in total productivity, were at work. The crisis made it worse," said Olivier Blanchard, the IMF's chief economist.  "Legacies of both the financial and the euro area crises — weak banks and high levels of public, corporate and household debt — are still weighing on growth. Low growth in turn makes deleveraging a slow process."   The world will remain stuck in a low-growth trap until 2020, and perhaps beyond. The Fund called for a blast of infrastructure spending by Germany and others with fiscal leeway to help break out of the impasse.   The report said markets may have been lulled into a complacency by the lowest bond yields in history and a strange lack of volatility, seemingly based on trust that central banks will always come to the rescue. Any evidence that the fault lines of the global financial system are about to be tested could "trigger turmoil", it warned....The Fund said yields on 10-year US Treasuries had fallen 80 basis points from October to January due to spillover effects from QE in Europe and Japan, but this sets up the potential for an even sharper spring-back once the Fed tightens in earnest.   The big worry is what will happen to Russia, Brazil and developing economies in Asia that borrowed most heavily in dollars when the Fed was still flooding the world with cheap liquidity. Emerging markets account to roughly half of the $9 trillion of offshore dollar debt outside US jurisdiction.  The IMF warned that a big chunk of the debt owed by companies is in the non-tradeable sector. These firms lack "natural revenue hedges" that can shield them against a double blow from rising borrowing costs and a further surge in the dollar. There has already been a trial run of what can go wrong with the much smaller scale of borrowing in Swiss francs.   "The balance sheet shock generated by the sudden large appreciation of the Swiss franc on some countries in central and eastern Europe with sizable domestic mortgage lending in that currency highlights the nature of these risks," it said.  The BRICS club is no longer in a fit state to handle the full consequences of a dollar shock, with the exception of India, the lone star with 7.5pc growth this year and next. India will overtake China in 2015 for the first time in modern memory.   Russia's economy will contract by 3.8pc this year as the full impact of the oil price crash and Western sanctions both bite deeper. Brazil faces a long slump, shrinking by 1pc in 2015, with barely a flicker of recovery in 2016.   While China is expected to avoid a hard-landing, its growth will slow yet further to 6.3pc next year. The Fund hinted that the much-trumpeted reforms so far add up to little and have yet to put the country on a viable course. 

More about BIS from "The Tower of Basel" an excellent book..

"The BIS is a unique institution: an international organization, an extremely profitable bank and a research institute founded, and protected, by international treaties. The BIS is accountable to its customers and shareholders—the central banks—but also guides their operations. The main tasks of a central bank, the BIS argues, are to control the flow of credit and the volume of currency in circulation, which will ensure a stable business climate, and to keep exchange rates within manageable bands to ensure the value of a currency and so smooth international trade and capital movements. This is crucial, especially in a globalized economy, where markets react in microseconds and perceptions of economic stability and value are almost as important as reality itself.The BIS also helps to supervise commercial banks, although it has no legal powers over them. The Basel Committee on Banking Supervision, based at the BIS, regulates commercial banks’ capital and liquidity requirements. It requires banks to have a minimum capital of eight percent of risk-weighted assets when lending, meaning that if a bank has risk-weighted assets of $100 million it must maintain at least $8 million capital. The committee has no powers of enforcement, but it does have enormous moral authority. “This regulation is so powerful that the eight percent principle has been set into national laws,” said Peter Akos Bod. “It’s like voltage. Voltage has been set at 220. You may decide on ninety-five volts, but it would not work.” In theory, sensible housekeeping and mutual cooperation, overseen by the BIS, will keep the global financial system functioning smoothly. In theory....The BIS is now the world’s thirtieth-largest holder of gold reserves, with 119 metric tons—more than Qatar, Brazil, or Canada. Membership of the BIS remains a privilege rather than a right. The board of directors is responsible for admitting central banks judged to “make a substantial contribution to international monetary cooperation and to the Bank’s activities.” China, India, Russia, and Saudi Arabia joined only in 1996. The bank has opened offices in Mexico City and Hong Kong but remains very Eurocentric. Estonia, Latvia, Lithuania, Macedonia, Slovenia, and Slovakia (total population 16.2 million) have been admitted, while Pakistan (population 169 million) has not. Nor has Kazakhstan, which is a powerhouse of Central Asia. In Africa only Algeria and South Africa are members—Nigeria, which has the continent’s second-largest economy, has not been admitted. (The BIS’s defenders say that it demands high governance standards from new members and when the national banks of countries such as Nigeria and Pakistan reach those standards, they will be considered for membership.)"

Maybe I watch the wrong financial TV channels on my 3 big TV setup, but I've seen quite a few so-called experts say that Greece can never repay the huge amount of money they owe because of the small population and weak economic structure.  But hey, they might all be wrong.   The US government didn't think it could justify bailing out Lehman Brothers. A trillion dollars loaned, and 14 trillion 'guaranteed' later, they might reconsider that decision, if given the chance again. And the US is a single country with a central bank & Treasury that can act quickly, if needed. (One Friday, around noon, in 2008, Secretary of the US Treasury, Hank Paulson, called the heads of the biggest US banks, and instructed them to be at a meeting at 5 P.M. at the headquarters of the New York Federal Reserve Bank. He told them that the government was going to make a big injection of cash into their banks in exchange for preferred stock. One bank CEO refused, saying his bank didn't need the money. Paulson told him that if he didn't sign the short document before the meeting ended, his bank would be publicly declared "capital deficient" by the Federal Reserve Bank, at the open of business on Monday morning. He signed, as did all the other bank heads.) Can the EU act that fast? Things really go south, and they might not have a lot of time to debate. That is how fast an overleveraged financial system can collapse.  I'm just happy we grow a lot more staple food items than we can possible eat over here in the US. Strawberries, and bananas I can live without. Bread and meat, not so much. ( I lied. They grow strawberries a few miles from me in Slidell. Possible with the aid of illegals. Covering the plants if it freezes is a labor intensive process. And recent winters in the eastern half of the US have been brutal. I noticed the first frost on my neighbor's roof on 2 November, 2014. At least the roads didn't get iced over last winter. Hopefully, the global warming winters will reach south Louisiana soon.)

Excerpt from TOWER OF BASEL: The Shadowy History of the Secret Bank that Runs the World by Adam LeBor ... : The world’s most exclusive club has eighteen members. They gather every other month on a Sunday evening at 7 p.m. in conference room E in a circular tower block whose tinted windows overlook the central Basel railway station. Their discussion lasts for one hour, perhaps an hour and a half. Some of those present bring a colleague with them, but the aides rarely speak during this most confidential of conclaves. The meeting closes, the aides leave, and those remaining retire for dinner in the dining room on the eighteenth floor, rightly confident that the food and the wine will be superb. The meal, which continues until 11 p.m. or midnight, is where the real work is done. The protocol and hospitality, honed for more than eight decades, are faultless. Anything said at the dining table, it is understood, is not to be repeated elsewhere.  As a result of allegations that the BIS had helped the Germans loot assets from occupied countries during World War II, the Bretton Woods Conference recommended the "liquidation of the Bank for International Settlements at the earliest possible moment".[6] This resulted in the BIS being the subject of a disagreement between the non-governmental U.S. and British delegations. The liquidation of the bank was supported by other European delegates, as well as the United States (including Harry Dexter White, Secretary of the Treasury, and Henry Morgenthau),[7] but opposed by John Maynard Keynes, head of the British delegation.

Fearing that the BIS would be dissolved by President Franklin Delano Roosevelt, Keynes went to Morgenthau hoping to prevent the dissolution, or have it postponed, but the next day the dissolution of the BIS was approved. However, the liquidation of the bank was never actually undertaken.[8] In April 1945, the new U.S. president Harry S. Truman and the British government suspended the dissolution, and the decision to liquidate the BIS was officially reversed in 1948.[9]

One strongly suspects that Roosevelt was assassinated because of this. Cui Bono. Ditto Kennedy, who opposed the Federal Reserve, an unconstitutional abomination, with his famous executive order 11110. Again that was quietly forgotten about after the events in Dallas. One must always analyse subsequent events to understand who benefited from these atrocities... The BIS has the right to communicate in code and to send and receive correspondence in bags covered by the same protection as embassies, meaning they cannot be opened. The BIS is exempt from Swiss taxes. Its employees do not have to pay income tax on their salaries, which are usually generous, designed to compete with the private sector. The general man- ager’s salary in 2011 was 763,930 Swiss francs, while head of departments were paid 587,640 per annum, plus generous allowances. The bank’s extraordinary legal privileges also extend to its staff and directors. Senior managers enjoy a special status, similar to that of diplomats, while carrying out their duties in Switzerland, which means their bags cannot be searched (unless there is evidence of a blatant criminal act), and their papers are inviolable. The central bank governors traveling to Basel for the bimonthly meetings enjoy the same status while in Switzerland. All bank officials are immune under Swiss law, for life, for all the acts carried out during the discharge of their duties. The bank is a popular place to work and not just because of the salaries. Around six hundred staff come from over fifty countries. The atmosphere is multi-national and cosmopolitan, albeit very Swiss, emphasizing the bank’s hierarchy. Like many of those working for the UN or the IMF, some of the staff of the BIS, especially senior management, are driven by a sense of mission, that they are working for a higher, even celestial purpose and so are immune from normal considerations of accountability and transparency....The Bank for International Settlements (BIS), is the bank for central banks. Its current members [ZH: as of 2013] include Ben Bernanke, the chairman of the US Federal Reserve; Sir Mervyn King, the governor of the Bank of England; Mario Draghi, of the European Central Bank; Zhou Xiaochuan of the Bank of China; and the central bank governors of Germany, France, Italy, Sweden, Canada, India, and Brazil. Jaime Caruana, a former governor of the Bank of Spain, the BIS’s general manager, joins them.

Greece could be safe for another few weeks, according to the Times newspaper, if Germany pays back a loan they took out from the Greek Govt during the war. In today's money this was about 10 billion Euros. The loan was fully documented and acknowledged by Germany just 26 days prior to the end of the war. So Tsipras could dig out this document and use it as collateral. Pheww - Greece is saved - maybe!!!   Suddenly, share markets in European and USA have gone up hugely because of this good new of repayment to IMF.   However, it is more dangerous now. According to a report, Greece issue new T-bills to cover the repayment. Then, who has/have bought the new T-bills?

Firstly, these T-bills are at higher rates, like somewhat 3.5% which is much higher than the interest rates by ECB and IMF. So, some US economists are predicting the Greece default will happen just a little bit later. By laymen's saying, the can has been kicked further down the road. However, the can has also become bigger and harder to kick further down next time.  Secondly, if Greece keeps issuing T-bills and borrowing new debts from unknown lenders (like Russian consortia), then the issue is getting more and more nontransparent. This non-transparency may explode without early on notice, like the happening of bankruptcy of the Lehman Brothers Bank in USA back in the end of 2008.  If you are a share trader, be careful.  Funny isn't it? If memory serves correctly the Greek Government have been demanding the return of 1.2 Billion Euros that were inadvertently overpaid by the previous Government and the only answer they have received so far from the ECB has been 'get stuffed'. Default Day arrives and hey presto! the ECB releases 1.2 Billion Euros to keep the Greek Economy out of it's coffin. Seems to me that the ONLY thing the Greeks received yesterday was their OWN money back dressed up as another LOAN....When this lot goes belly up, and it will, when the dust has settled and the TRUTH starts to come out, I think the world is going to be shocked beyond belief at the amount of lying, suffering and skullduggery that will be revealed...Daft ain't 'it.. child's  accounting..makes my grandson look smart. Unchecked decade of capital asset-flight pulling the carpet from under the Greek banks; EZB provides the drip-feed ELA's to counter; what the heck is Lagarde up to ? Give 'em whatever dosh and now "whoa got some back !" Tspiras thought he would bring down the rotten edifice and he's still got a few big chances to do it. Will he really press with the reforms, some fractious constitutional ones ? Doesn't look it. That transformer reform list that Yanis gave to the EU finance committee "Djssel diesel", is probably scrupled up and binned.
The problem is Lagarde, it couldn't get more fictive. It highlights the IMF's mistake of pumping Greece with bailout dosh in 2010. It's going to be mighty hard/impossible for Greece to deal with those massive May June reimbursements with without more assistance from the EZB, and Germany again coming into the fray as the stupid merry go round looses it's centrifuge.

The Fiware project is a public-private partnership between the EU and a consortium of companies that started in 2011.  The software tools that entrepreneurs like Visser may use were developed by European telecommunication companies like Telefonica and Ericsson. The industry has said it is also investing €300 million in the project, which includes online tutorials on how to use Fiware, and local 'Fiware innovation hubs'.  Fiware is royalty-free and open source, which means that it can be used free of charge, and developers may further develop it as well.  Non-European companies can use the tools as well.   “We don't mind if they are from Japan, from US, from China, from Latin America”, said Jesus Villasante, from the department of Net innovation in the European Commission. “What we don't want is that there would be only one operator that would be able to capture value. For us the idea is that internet should be open, and therefore we should allow for open initiatives that would compete with some proprietary initiatives.”  Proprietary software, as opposed to open source, can only be used if you have acquired a license. Examples include Microsoft Windows, Adobe Photoshop, and Mac OS X.  "In Europe there is a strong potential for innovation, for start-ups, for entrepreneurs. We need to have this innovation capacity in an open environment, not in a closed environment”, noted Villasante.  To promote the use of Fiware, the EU is investing €80 million in up to 1,000 start-ups.  The money is being distributed to 16 so-called accelerators, organisations that help start-ups grow by providing funding and other support.  Konnektid is one of the beneficiaries of such an accelerator, called European Pioneers, based in Berlin.  One way the EU is trying to spread the use of Fiware is by making grant money - up to €150,000 per start-up - conditional on its use. “It's a kind of a trade-off. You need to find Fiware attractive and useful. If not, then you probably should be applying to a different accelerator”, said Ludtke, adding that the 12 start-ups under his guidance have so far not experienced it as a burden.  Michel Visser hasn't either, although he is defiant about what would happen if he found a piece of non-Fiware software that would be better for his app. “It's business first. If it's stopping my business I would definitely say: listen, I tried it, this is what I experienced, this is my feedback, but I'm going to use something different. That's what I would fight for. I'm a founder of a company and I need to run my business. ”

The EU commission's Villasante is much less strict than Ludtke - who oversees the handing out of money to some start-ups- on the use of Fiware as a precondition. Villasante said it was more important that the start-ups tried Fiware to see if it is useful to them.

“We don't believe that all the 1,000 start-ups will develop applications that will be successful in the market. There may also be some SMEs that play with Fiware, develop the product, but decide: this is not for me, I prefer to use this other thing. That's fine.”

Some recipients of the EU grants have told this website that they were more interested in the grant money than in Fiware.

“There are plenty of alternatives to Fiware that are also open source,” said one entrepreneur who wished to remain anonymous.

“The EU is pushing software that is not necessarily the best,” he added.