With the introduction of the Flexible Financing Facility and in line with IDB’s commitment to flexibilize its financial product offering, as of May 1, 2012, the IDB changed the composition of the Currency Pooling System (CPS) funding pool from its four currencies — dollar, yen, euro and swiss francs — to 100% dollars. This change will further facilitate debt management by borrowers by dollarizing the outstanding loan balances (OLBs) as of this date, and remove uncertainty in connection with principal amounts due to the IDB.

The CPS was introduced in 1982 to ensure that IDB borrowers shared equally the risk of exchange rate fluctuations embedded over the life of their IDB loans. This was achieved by placing into a central account or pool, all convertible currency disbursed to all borrowers, and extracting from the pool all repayments in such currencies. The pool was valued in terms of the total US$ equivalent of its component currency balances (Unit of Account). While the currency composition of the pool changed over time, the target composition of the CPS pool for OLBs was 50 percent dollars, 25 percent yen, 12.5 percent euro and 12.5 percent swiss francs before its dollarization. Loans approved until 1989 carried a fixed interest rate, while loans approved after 1989 carried an adjustable interest rate that resets twice a year on January and July.

By 1996, lack of demand for CPS loans and an increased demand for single currency denominated loans, in particular dollar loans, resulted in the introduction of the Single Currency Facility. The CPS was closed for new approvals in 2003.

For applicable rates on CPS outstanding balances please refer to Interest Rates and Charges.

For historic rates, please see CPS rates.