Special drawing rights (SDRs)
Posted by Ripon Abu Hasnat on Friday, June 13, 2014 | 0 comments
Special drawing
rights (SDRs)
are supplementary foreign exchange reserve assets defined and maintained by the
International Monetary Fund (IMF). Not a currency, SDRs instead represent a
claim to currency held by IMF member countries for which they may be exchanged.
As they can only be exchanged for euro’s, Japanese yen, pounds sterling, or US
dollars, SDRs may actually represent a potential claim on IMF member countries'
nongold foreign exchange reserve assets, which are usually held in those
currencies. While they may appear to have a far more important part to play,
or, perhaps, an important future role, being the unit of account for the IMF
has long been the main function of the SDR.
Created in 1969 to supplement a
shortfall of preferred foreign exchange reserve assets, namely gold and the US
dollar, the value of a SDR is defined by a weighted currency basket of four
major currencies: the US dollar, the euro, the British pound, and the Japanese
yen.[1] SDRs are denoted with the ISO 4217 currency code XDR.
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