Board Decisions


Approved by the Board on: 22 April 2005

Euro-denominated Grants and Currency Risk Management

The Global Fund shall take action to minimize its exposure to currency risk through the following transitional policies that set a framework for currency risk management:

  1. hedge exposure to currency risk by matching the values[1] of USD assets with USD grant liabilities and Euro assets with Euro grant liabilities to the extent possible using available liquidity, so as to minimize any mismatch within each currency (excess liquidity after matching shall be held in USD and Euro);
  2. encourage donors to denominate promissory notes only in the grant currencies (USD and Euro);
  3. if a material currency mismatch remains after these measures, maintain a reserve against commitment authority as a cushion to absorb any potential losses and thus minimize commitments being made in excess of assets available; and
  4. encourage prospective grant recipients to provide information as to the currency in which they will submit future grant applications.

The operational implications and practices shall continue to be reviewed by the Secretariat under the guidance of the FAC to present a full recommendation to set the policy and parameters of the currency risk exposure at the Eleventh Board meeting unless insufficient experience warrants extension until the Twelfth Board meeting.