Q.What are Special Drawing Rights (SDRs)? Why were they created?
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Start your 14-day free trial to unlock the full solution →By the late 1960s, the growth of world trade and payments was outpacing the growth of traditional international reserve assets — mainly gold and the US dollar. To address this shortfall, the IMF created the Special Drawing Right (SDR) in 1969 as a supplementary international reserve asset.
An SDR is not a currency in the way the rupee or dollar is; it is an entry in members' accounts with the IMF, and its value is determined daily against a basket of major currencies (historically including the US dollar, euro, pound sterling, Japanese yen, and Chinese renminbi). Members can use SDRs to obtain other currencies from each other or from the IMF, effectively adding to their usable foreign-exchange reserves without needing to earn them through trade or borrowing. …
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