SDR currency refers to the Special Drawing Right (SDR), also known as "Paper Gold", which was first issued in 1969. It is a book asset allocated by the International Monetary Fund according to the share subscribed by member countries, and can be used to repay IMF debts and make up for the balance of payments deficit between member governments.
At present, its value is determined by a basket of reserve currencies consisting of US dollar, Euro, RMB, Japanese yen and British pound. When a member country has a balance-of-payments deficit, it can exchange foreign exchange with other member countries designated by the IMF to pay the balance-of-payments deficit or repay IMF loans, and it can also act as an international reserve like gold and freely convertible currencies.
Because it is a supplement to the original ordinary drawing rights of the International Monetary Fund, it is called Special Drawing Rights.
when it was first issued, each unit was equal to .888 gram of gold, which was equivalent to the US dollar at that time. The purpose of issuing SDR is to supplement gold and convertible currencies to maintain the stability of the foreign exchange market.
On November 3th, 215, the International Monetary Fund officially announced that RMB will join SDR (Special Drawing Rights) on October 1st, 216.
on October 1, 216, the value of SDR was determined by the current exchange rate of a basket of five currencies, namely, US dollar, Euro, RMB, Japanese yen and British pound, accounting for 41.73%, 3.93%, 1.92%, 8.33% and 8.9% respectively.
Extended information
Main uses
According to the provisions of the Fund Agreement and IMF resolutions, the SDR can be used for the following purposes at present:
1. According to the provisions of Article 19, paragraph 3, of the Fund Agreement, participating countries can apply to the IMF for arranging to exchange freely usable foreign exchange with other participating countries under the SDR account;
after receiving the application, the IMF can coordinate and designate some participating countries (with good balance of payments and strong international reserve status) as the targets for accepting the SDR, and exchange foreign exchange with the applicant country within the prescribed time limit;
The applicant country has no proportional restrictions on such exchange, and can exchange all its SDR holdings into freely usable foreign exchange.
2. According to Article 19, paragraph 2 (b) of the Fund Agreement, a participating country can also exchange the SDR into other currencies (including foreign exchange that cannot be freely used) by reaching an agreement with other participating countries, without obtaining the approval of the Fund or following the relevant provisions and principles of the Fund (including the restrictions on the "need" of exchange);
However, such transactions shall be subject to the principle of not violating Article 22 of the Fund Agreement (changing the international reserve structure).
3. according to paragraph 2 of article 17 of the fund agreement, a participating country may apply to transfer its SDR held under the SDR account to the general resource account to make up for the debt caused by the fact that the reserve of the participating country under the general resource account is less than 25% of its quota, or to repay other debts owed to the fund (for example, according to paragraph 6 of article 5 of the fund agreement);
after receiving the application from the applicant country, the fund's SDR department actually needs to convert the SDR into the required currency from other participating countries and transfer it to the general reference account of the applicant country. Therefore, in the process, the fund must obtain the consent of the relevant foreign exchange countries.
4. According to the current resolution of the IMF, the special drawing rights (SDRs) collectively represent the currencies of five freely usable currencies in an adjustable ratio (called the "SDR basket"), and their currencies are relatively stable and can be used as monetary units.
5. According to Article 3 of the Fund Agreement, as long as it is approved by the Fund, the SDR can also be used for other related financial business between the members and non-members of the Fund.
judging from the existing resolutions and current practice of the IMF, SDR has been used for forward trade payments, specific loans, international financial settlement, international financial business deposits, fund interest and dividend payments, grants and so on between member countries and non-member countries.
finally, as a relatively stable international reserve asset and a unit of monetary value, the IMF can change the pricing method and principle of SDR at any time under the authorization of Article 15, paragraph 2, of the Fund Agreement.
the SDR was directly linked to gold when it was founded (ISDR value was .888671g of gold), and was linked to the currencies of sixteen countries after the second revision of the Fund Agreement;
according to resolutions 6631 and 678 adopted by the executive board of the fund in 198, the currencies of the five fund member countries with the highest international export trade and service trade will form the SDR currency basket from January 1, 1986, and will be adjusted every five years thereafter, and the currencies of the five countries will be designated as freely usable currencies.
according to the SDR currency basket, which came into effect on January 1, 1986, the SDR collection represents the value of five currencies, namely, the SDR basket.