SDR:
- Special Drawing Rights
- Created by IMF to supplement official reserves to its member countries
- Initially based on 4 currencies: $ (US dollar), Japanese Yen, Pound Sterling, Euro
- Before creation of SDR only Gold and USD were primarily used in the international market
- Recently Chinese Renminbi added (RMB)
- SDR is allocated to members in proportion to their standing in global economy
- SDR cannot be used to purchase goods and services directly, countries can exchange them among themselves.
- Member countries can voluntarily exchange SRD for 5 currencies
Q&A:
Q: Is SDR an interest earning instrument?
A: Yes. If member country buys SDR and has above allocation level, it gains interest.
Source: IMF Website
No comments:
Post a Comment
Thank you for your comment.I'll get back to you as soon as possible.
Regards,
Naveen