Description: The SDR and Its Potential as an International Reserve Asset

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The SDR and Its Potential as an International Reserve Asset

Since the onset of the global financial crisis, there has been an upswing of interest among some prominent policy makers and academics in the International Monetary Fund's (IMF) Special Drawing Right (SDR) as a 'safe' international r...

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Bibliographic Details
Main Author:	Chelsky, Jeff
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ACCUMULATION OF RESERVES ADDITIONAL CURRENCIES ALLOCATION ASSETS BALANCE OF PAYMENT BALANCE SHEET BASKET CURRENCY BASKET OF CURRENCIES BILLS CAPITAL ACCOUNT CAPITAL CONTROLS CENTRAL BANK CENTRAL BANKS CLIMATE CLIMATE CHANGE COLLATERALIZATION COMMERCIAL BANKS COMPOSITE CURRENCIES CONTINGENT LIABILITY CONVERTIBILITY CRITICAL MASS CURRENCY CURRENCY BASKET CURRENCY COMPOSITION CURRENCY DENOMINATION CURRENCY RISK DEBT DEBT RELIEF DEPOSIT DEPRECIATION DEVELOPMENT BANK DOMINANT CURRENCY ECONOMIC POLICY EMERGING ECONOMIES EMERGING MARKET EMERGING MARKET CURRENCIES EMERGING MARKETS EURO EXCHANGE MARKETS EXPANSION OF WORLD TRADE EXPORTER EXPOSURE EXPOSURE TO RISKS FEASIBILITY FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DATA FINANCIAL DEVELOPMENT FINANCIAL REASONS FINANCIAL TRANSACTIONS FIXED EXCHANGE RATES FLEXIBLE EXCHANGE RATES FOREIGN EXCHANGE FOREIGN EXCHANGE RESERVES FOREIGN RESERVE FREELY USABLE CURRENCIES GEOGRAPHIC DISTRIBUTION GLOBAL ECONOMY GLOBAL LIQUIDITY GOLD IMPORTS INDIVIDUAL CURRENCIES INTEREST RATE INTERMEDIATION INTERNATIONAL BONDS INTERNATIONAL CAPITAL INTERNATIONAL CAPITAL MARKETS INTERNATIONAL DEVELOPMENT INTERNATIONAL FINANCE INTERNATIONAL FINANCIAL ARCHITECTURE INTERNATIONAL FINANCIAL MARKETS INTERNATIONAL FINANCIAL SYSTEM INTERNATIONAL MONETARY SYSTEM INTERNATIONAL RESERVE INTERNATIONAL TRANSACTIONS ISSUANCE JAPANESE YEN LIABILITY LIQUIDITY PREMIUM MACROECONOMIC POLICIES MAJOR CURRENCIES MARKET LIQUIDITY MARKET MAKER MONETARY FUND MONETARY STABILITY MONETARY UNIONS MONOPOLY MULTILATERAL DEVELOPMENT NATIONAL CURRENCY OLIGOPOLY OPEN ECONOMIES OTHER CURRENCIES OUTTURNS PEG POLICY MAKERS PORTFOLIO PORTFOLIO DIVERSIFICATION PORTFOLIOS POVERTY REDUCTION PRIVATE MARKETS REMUNERATION RESERVE ACCUMULATION RESERVE CURRENCIES RESERVE CURRENCY RESERVE HOLDINGS RESPONSE TO CLIMATE CHANGE RETURN SAFETY NET SDR HOLDINGS SDR ROLE SDR USE SECURITIES SEIGNIORAGE SETTLEMENT SHORT-TERM RATES SINGLE CURRENCY SPECIAL DRAWING RIGHTS STORE OF VALUE SUBSTITUTION SUBSTITUTION ACCOUNT SURPLUS SWAP SWAPS TOTAL EXPORTS TRADING TRANSACTION TREASURY TREASURY BILLS VALUATION VOLATILITY WIDELY USED CURRENCIES WORLD ECONOMY
Online Access:	http://documents.worldbank.org/curated/en/2011/05/14251007/sdr-potential-international-reserve-asset http://hdl.handle.net/10986/10095

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Summary:	Since the onset of the global financial crisis, there has been an upswing of interest among some prominent policy makers and academics in the International Monetary Fund's (IMF) Special Drawing Right (SDR) as a 'safe' international reserve asset. But preexisting constraints on the SDR and the magnitude of support required to push through the reforms necessary to enhance the SDR's role make it unlikely that ambitious aspirations for this 'quasi-currency' will be realized. Moreover, the case for enhancing the SDR's role has been somewhat overstated, as has the view that the current international monetary system requires the dominance of a single currency, namely the U.S. dollar. To a significant extent, U.S. dollar dominance is the result of specific policy choices by individual countries (for example, export-led growth strategies, close links to the U.S. dollar) rather than an inherent rigidity in the international monetary system. Many of the problems that some policy makers are seeking to address through a greater role for the SDR can more easily be achieved in the context of the continuing trend to a multicurrency reserve system.