What is the SDR currency? | My Site

What is the SDR currency? | My Site

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What is the SDR currency?

Posted by popcorn 840 days ago (Editorial)

What is the SDR currency?

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Written by 321answers
839 days ago

SDR stands for (Special Drawing Note) - The SDR was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. SDRs are defined in using the worth against other major currencies used in international trade and finance. At present, one SDR is the sum of 0.6320 US Dollars, 0.4100 euro, 18.4 Japanese yen and 0.0903 pound sterling.

You can use this link to check the basket exchange rate of the SDR; http://www.imf.org/external/np/fin/data/rms_sdrv.aspx />
SDRs were originally created to replace Gold and Silver in large international transactions. Being that under a strict (international) gold standard, the quantity of gold worldwide is finite, and the economies of all participating IMF members as an aggregate are growing, a purported need arose to increase the supply of the basic unit or standard proportionately. Thus SDRs, or "paper gold", are credits that nations with balance of trade surpluses can 'draw' upon nations with balance of trade deficits.

So-called "paper gold" is little more than an accounting transaction within a ledger of accounts, which eliminates the logistical and security problems of shipping gold back and forth across borders to settle national accounts.

It has also been suggested that having holders of US dollars convert those dollars into SDRs would allow diversification away from the dollar without accelerating the decline of the value of the dollar.

“China threw down a challenge to America’s 50-year dominance of the global economy as it proposed replacing the dollar as the world’s main reserve currency with a new global system under the control of the International Monetary Fund.

In a muscle-flexing move that will be seen as an attempt to exploit the big shifts in economic power created by the recession sweeping the West, Beijing said that the dollar’s role could eventually be taken over by the IMF’s so-called Special Drawing Right (SDR), a quasi-currency that was created in 1969.

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