China has agreed to buy the first International Monetary Fund bonds for about $50 billion,the IMF said on Wednesday. IMF managing director Dominique Strauss-Kahn and the deputy governor of the Peoples Bank of China,Yi Gang,signed the agreement at IMF headquarters in Washington,the multilateral institution said. Under the agreement,the Chinese central bank would purchase up to SDR 32 billion (around $50 billion) in IMF notes, it said. An SDR is an interest-bearing IMF asset based on a basket of international currencies the dollar,yen,euro and pound that is calculated daily and which members can convert into other currencies. The note purchase agreement is the first in the history of the fund, the 186-nation institution said. The IMF executive board approved the plan to issue notes to governments on July 1. The issuance of bonds is an unprecedented step to boost IMF resources as the institution struggles to provide financing to help member nations cope with the global financial and economic crises. The agreement offers China a safe investment instrument. It will also boost the funds capacity to help its membership, the IMF said.
