[House Report 117-316]
[From the U.S. Government Publishing Office]


117th Congress    }                                    {     Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                    {     117-316

======================================================================



 
        RUSSIA AND BELARUS SDR EXCHANGE PROHIBITION ACT OF 2022

                                _______
                                

  May 10, 2022.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

         Ms. Waters, from the Committee on Financial Services,
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 6899]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 6899) to prohibit the Secretary of the Treasury 
from engaging in transactions involving the exchange of Special 
Drawing Rights issued by the International Monetary Fund that 
are held by the Russian Federation or Belarus, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Section-by-Section Analysis of the Legislation...................     3
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     4
Committee Oversight Findings.....................................     6
Statement of Performance Goals and Objectives....................     6
New Budget Authority and C.B.O. Cost Estimate....................     6
Committee Cost Estimate..........................................     7
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     8
Applicability to Legislative Branch..............................     8
Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
  Benefits.......................................................     8
Duplicative Federal Programs.....................................     8

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Russia and Belarus SDR Exchange 
Prohibition Act of 2022''.

SEC. 2. SPECIAL DRAWING RIGHTS EXCHANGE PROHIBITION.

  (a) In General.--The Secretary of the Treasury may not engage in any 
transaction involving the exchange of Special Drawing Rights issued by 
the International Monetary Fund that are held by the Russian Federation 
or Belarus.
  (b) Advocacy.--The Secretary of the Treasury shall--
          (1) vigorously advocate that the governments of the member 
        countries of the International Monetary Fund, to the extent 
        that the member countries issue freely usable currencies, 
        prohibit transactions involving the exchange of Special Drawing 
        Rights held by the Russian Federation or Belarus; and
          (2) direct the United States Executive Director at each 
        international financial institution (as defined in section 
        1701(c)(2) of the International Financial Institutions Act) to 
        use the voice and vote of the United States to oppose the 
        provision of financial assistance to the Russian Federation and 
        Belarus, except to address basic human needs of the civilian 
        population.
  (c) Termination.--The preceding provisions of this section shall have 
no force or effect on the earlier of--
          (1) the date that is 5 years after the date of the enactment 
        of this Act; or
          (2) 30 days after the date that the President reports to the 
        Congress that the governments of the Russian Federation and 
        Belarus have ceased destabilizing activities with respect to 
        the sovereignty and territorial integrity of Ukraine.
  (d) Waiver.--The President may waive the application of this section 
if the President reports to the Congress that the waiver is in the 
national interest of the United States and includes an explanation of 
the reasons therefor.

                          PURPOSE AND SUMMARY

    On March 2, 2022, Representative Hill introduced H.R. 6899, 
the ``Russia and Belarus SDR Exchange Prohibition Act of 
2022'', which would prohibit the Secretary of the Treasury from 
providing U.S. dollars in exchange for any Special Drawing 
Rights held by the Russian Federation or Belarus. It also 
mandates that the Secretary of the Treasury vigorously advocate 
that other governments which hold freely usable currencies 
similarly refuse to convert any Special Drawing Rights held by 
the Russian Federation or Belarus into a hard currency. The 
legislation also mandates the Secretary of the Treasury to 
instruct the U.S. representative at each international 
financial institution (such as the International Monetary Fund 
and the World Bank) to oppose the provision of financial 
assistance from the respective institution to the Russian 
Federation and Belarus, except to address the basic human needs 
of the civilian population. These mandates would terminate on 
the earlier of the date that is 5 years after the date of 
enactment of the bill or 30 days after the President certifies 
that the governments of the Russian Federation and Belarus have 
ceased destabilizing activities with respect to the sovereignty 
and territorial integrity of Ukraine. The bill provides the 
President the authority to waive any provisions of the bill if 
the President certifies that doing so would be in the national 
interest of the United States.

                  BACKGROUND AND NEED FOR LEGISLATION

    Special Drawing Rights (SDRs) are a special reserve asset 
of the International Monetary Fund (IMF) distributed to each 
member country in proportion to its shareholding in the Fund. 
Countries can hold their SDRs as part of their precautionary 
reserve balances or convert them into hard currency to finance 
balance of payments needs, pay for imports, adjust the 
composition of their reserves, or pay back IMF loans. In August 
2021, the IMF approved a $650 billion allocation of SDRs, of 
which $275 billion went to emerging market and developing 
countries to help transform the global pandemic crisis into a 
fair and resilient economic recovery.
    Russia and Belarus did receive their legal share of the 
recent SDR allocation, raising concerns that the allocation 
would provide unconditional liquidity these countries who are 
acting against U.S. interests. However, the Department of 
Treasury has noted that it has the right to refuse to exchange 
SDRs for any nation whose policies the U.S. opposes, and that 
maintaining such a policy will help ensure that Russia and 
Belarus will not be able to use any of their SDR allocations. 
In fact, to date, Belarus has not used any of its new SDR 
holdings, and Russia continues to hold virtually all of its 
recently acquired SDRs as well. Given the recent G7 sanctions 
against transactions with Russia's central bank, and the raft 
of new sanctions against Belarus, it would be difficult for any 
country to convert the SDRs of either country without running 
afoul of international sanctions. This bill would reinforce the 
Biden Administration's existing policy and help ensure that 
Russia and Belarus cannot use any of their SDRs as long as the 
illegal invasion of Ukraine persists.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

           This section establishes the short title of 
        the bill as the ``Russia and Belarus SDR Exchange 
        Prohibition Act of 2022.''

Section 2.

           This section prohibits the Treasury 
        Secretary from participating in an exchange of Russian 
        or Belarussian held Special Drawing Rights (SDRs) and 
        directs the Treasury Secretary to vigorously advocate 
        that member countries of the International Monetary 
        Fund (IMF) also prohibit the exchange of such SDRs.
           This section also directs the Treasury 
        Secretary to instruct the U.S. Executive Directors at 
        each of the International Financial Institutions to use 
        their voice and vote to oppose any financial assistance 
        to the Russian Federation and Belarus, except to 
        address humanitarian needs.
           This section sunsets the bill on the earlier 
        of 5 years after enactment or 30 days after the 
        President certifies that Russia has ceased its 
        destabilizing activities with respect to the 
        sovereignty and territorial integrity of Ukraine.
           The bill also authorizes the President to 
        waive the application of this section if it is in the 
        national interest of the U.S.

                                HEARINGS

    For the purposes of section 3(c)(6) of House rule XIII, the 
Committee on Financial Services' Full Committee held a hearing 
on April 6, 2022 to consider H.R. 6899 entitled, ``The Annual 
Testimony of the Secretary of the Treasury on the State of the 
International Financial System.''

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
March 17, 2022, and ordered H.R. 6899 to be reported favorably 
to the House with an amendment in the nature of a substitute by 
a voice vote, a quorum being present.

                  COMMITTEE VOTES AND ROLL CALL VOTES

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following roll call votes occurred during the Committee's 
consideration of H.R. 6899: An amendment in the nature of a 
substitute, no. 3, offered by Mr. Hill was AGREED TO by voice 
vote.


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

  STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

             STATEMENT OF PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause (3)(c) of rule XIII of the Rules of the 
House of Representatives, the goals of H.R. 6899 are to The 
bill would prohibit the Secretary of the Treasury from 
providing U.S. dollars in exchange for any Special Drawing 
Rights held by the Russian Federation or Belarus. It also 
mandates that the Secretary of the Treasury vigorously advocate 
that other governments which hold freely usable currencies 
similarly refuse to convert any Special Drawing Rights held by 
the Russian Federation or Belarus into a hard currency. The 
legislation also mandates the Secretary of the Treasury to 
instruct the United States representative at each international 
financial institution (such as the International Monetary Fund 
and the World Bank) to oppose the provision of financial 
assistance from the respective institution to the Russian 
Federation and Belarus, except to address the basic human needs 
of the civilian population. These mandates would terminate on 
the earlier of the date that is 5 years after the date of 
enactment of the bill or 30 days after the President certifies 
that the governments of the Russian Federation and Belarus have 
ceased destabilizing activities with respect to the sovereignty 
and territorial integrity of Ukraine. The bill provides the 
President the authority to waive any provisions of the bill if 
the President certifies that doing so would be in the national 
interest of the United States.

               NEW BUDGET AUTHORITY AND CBO COST ESTIMATE

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives and section 308(a) of the 
Congressional Budget Act of 1974, and pursuant to clause 
3(c)(3) of rule XIII of the Rules of the House of 
Representatives and section 402 of the Congressional Budget Act 
of 1974, the Committee has received the following estimate for 
H.R. 6899 from the Director of the Congressional Budget Office:


	[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    H.R. 6899 would prohibit the Department of the Treasury 
from exchanging U.S. dollars for Special Drawing Rights (SDR) 
held by Russia or Belarus. SDR are an international reserve 
asset of the International Monetary Fund (IMF) that are 
distributed to each member country. The bill would direct the 
department to encourage other IMF members to follow suit and to 
oppose any non-humanitarian assistance for Russia and Belarus 
provided by international financial institutions such as the 
IMF and World Bank.
    On the basis of information about the costs of similar 
diplomatic efforts to influence the actions of other nations, 
CBO estimates that implementing H.R. 6899 would cost less than 
$500,000 over the 2022-2026 period. Such spending would be 
subject to the availability of appropriated funds.
    The CBO staff contact for this estimate is Sunita D'Monte. 
The estimate was reviewed by Leo Lex, Deputy Director of Budget 
Analysis.

                        COMMITTEE COST ESTIMATE

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison of the 
costs that would be incurred in carrying out H.R. 6899. 
However, clause 3(d)(2)(B) of that rule provides that this 
requirement does not apply when the committee has included in 
its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

                       UNFUNDED MANDATE STATEMENT

    Pursuant to Section 423 of the Congressional Budget and 
Impoundment Control Act (as amended by Section 101(a)(2) of the 
Unfunded Mandates Reform Act, Pub. L. 104-4), the Committee 
adopts as its own the estimate of federal mandates regarding 
H.R. 6899, as amended prepared by the Director of the 
Congressional Budget Office.

                           ADVISORY COMMITTEE

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

              APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

    Pursuant to section 102(b)(3) of the Congressional 
Accountability Act, Pub. L. No. 104-1, H.R. 6899, as amended, 
does not apply to terms and conditions of employment or to 
access to public services or accommodations within the 
legislative branch.

                           EARMARK STATEMENT

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 6899 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as described in clauses 9(e), 9(f), and 9(g) of rule 
XXI.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee states that no 
provision of H.R. 6899 establishes or reauthorizes a program of 
the Federal Government known to be duplicative of another 
federal program, a program that was included in any report from 
the Government Accountability Office to Congress pursuant to 
section 21 of Public Law 111-139, or a program related to a 
program identified in the most recent Catalog of Federal 
Domestic Assistance.

                                  [all]