As a result of the foregoing transactions, the dollar holdings of foreign central banks have been enlarged by $25 million (as explained under transaction 8). But for a number of reasons these banks might not wish to hold exactly this additional amount of dollar claims for any length of time. In particular, they might fear a further depreciation of the dollar in the foreign-exchange markets. Whatever the reason, assume that the U.S. authorities wish to cooperate in supporting the foreign-exchange value of the dollar and that they therefore transfer SDRs valued at $10 million to the foreign central bankers in exchange for 10 million in dollar balances. U.S. liabilities held by foreign monetary authorities then decline by $10 million, and U.S.-owned SDRs decline by the same amount. If gold instead of SDRs had been transferred, the credit entry would have been made on line 13 rather than line 14.
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