Special drawing right (SDR)

In interbank transactions, the means of payment issued by the International Monetary Fund (IMF) to member countries. The SDR (SDR; ISO code: XDR) is not a monetary unit. It is primarily a unit of account and book money. It is also used by public and private entities, among other things as a successor to those units of account that were formerly expressed in gold values (e.g. gold francs; [Swiss] gold francs). Most parities are also expressed in SDRs. – The SDR was introduced by the International Monetary Fund in 1969 to enable the creation of additional liquidity. SDRs are distributed to all member countries according to their capital ratios at the IMF. They are free and unconditional. IMF member countries can exchange their allocated SDRs for local currency at their respective central banks. Critics therefore see SDRs as helicopter money and a form of development aid that fuels global inflation. – SDRs are intended to allow IMF members to mobilize freely available reserve currencies such as the USD and EUR at participating central banks; they are, as it were, vouchers on a currency. However, to introduce SDRs as a general reserve currency, as is sometimes called for, would amount to the International Monetary Fund acting like a world central bank in the future and, accordingly, conducting global monetary policy. This would conflict with the respective national responsibility for monetary policy and is therefore undesirable. – It is also a flagrant violation of the agreements in EMU if, in the name of financial solidarity, it is demanded that the central banks of the rich – that is, their competitiveness laboriously fought for – members contribute their holdings of SDRs to a fund from which the European Financial Stabilization Facility is then fed in one way or another. – The value of the SDR is officially calculated daily on the basis of the exchange rates of the underlying currency basket. The composition of the currency basket and the weight and quantity of currencies in the basket are reset every five years. When the SDR was determined on December 30, 2008, only five currencies (USD, EUR. JPY and GBP) remained in the basket. – See devaluation, appreciation, bail-out, helicopter money, gold sacrifice, neuro, parity, settlement money, transfer union, currency. – Cf. 2000 Annual Report of the European Central Bank, p. 109; ECB Monthly Bulletin, March 2010, p. 57 ff. (problem of expanding SDRs; overviews).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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