Special drawing rights (SDR),
Definition of Special drawing rights (SDR):
An SDR is essentially an artificial currency instrument used by the IMF, and is built from a basket of important national currencies. The IMF uses SDRs for internal accounting purposes. SDRs are allocated by the IMF to its member countries and are backed by the full faith and credit of the member countries' governments. The makeup of the SDR is re-evaluated every five years. The current makeup on the SDR is represented by the following table:.
Special drawing rights (SDR) refer to an international type of monetary reserve currency created by the International Monetary Fund (IMF) in 1969 that operates as a supplement to the existing money reserves of member countries. Created in response to concerns about the limitations of gold and dollars as the sole means of settling international accounts, SDRs augment international liquidity by supplementing the standard reserve currencies.
A form of international money, created by the International Monetary Fund, and defined as a weighted average of various convertible currencies.
International financing instrument created in 1970 by the International Monetary Fund (IMF) to coincide with the disfavor of the US dollar as the principal currency of the world trade. Also called paper gold, an SDR is neither paper nor gold but an accounting entry. It is not backed by any currency or precious metal, and is used only among governments and IMF for balance Of payments settlements. SDRs are a measure of a countrys reserve assets with IMF and, whereas not money in the strict sense, have several characteristics of money as interest bearing assets, store of value, and means of settling indebtedness. They are distributed among all member states of IMF in proportion to each members quota of IMF dues based on the members GNP. Used mainly to supplement gold and convertible (hard) currencies in maintaining stability of foreign exchange markets, SDRs are valued on the basis of the value of a basket of 16 major currencies with periodically adjusted weightage reflecting each currencys importance in global trade.
How to use Special drawing rights (SDR) in a sentence?
- The value of the SDR is calculated from a weighted basket of major currencies, including the U.S. dollar, the euro, Japanese yen, Chinese yuan, and British pound.
- Special drawing rights, or SDR, are an artificial currency instrument created by the International Monetary Fund, which uses them for internal accounting purposes.
- The SDR interest rate (SDRi) provides the basis for calculating the interest rate charged to member countries when they borrow from the IMF and paid to members for their remunerated creditor positions in the IMF.
- He gives pride of place to a proposal to expand the existing system of International Monetary Fund special drawing rights.
Meaning of Special drawing rights (SDR) & Special drawing rights (SDR) Definition