Special drawing rights, Microeconomics

Assignment Help:

Special Drawing Rights:

SDRs are entitlement granted to member countries enabling them to draw from the IMF apart from their quota. It is similar to a bank granting a credit limit to the customer. When SDRs are allocated, the country's Special Drawing Account with the IMF is credited with the amount of the allotment. 

SDR is not a currency. It is merely an asset created out of book entries. As such it is an independent reserve asset. The volume of SDRs can be increased or decreased according to the reserve needs of the international liquidity. Initially, the value of one SDR was equal to a specific quantity of gold (which equalled the value of 1 US Dollar) and provided with an absolute gold value guarantee. That is why SDRs were popularly known as ‘Paper Gold'. Later, the value of SDR was linked to a basket of five currencies. The basket is reviewed every five years. It currently, consists of the Euro, the Yen, the Pound sterling and the US Dollor. When a member country utilises SDRs in holding would be less than the allocation. SDRs can be used directly among the members. A country may swap SDRs with another country to acquire a currency it desires. SDRs may be utilised to pay charges to IMF. SDR may be utilised to pay charges to IMF. SDR has gained importance both as a reserve asset and as a Unit of settlement of international transactions. Some international banks time deposits designated in SDR. Some countries have pegged their currencies to SDR.

 


Related Discussions:- Special drawing rights

Explain about non-renewable resources, How the above would apply to non-ren...

How the above would apply to non-renewable resources such as oil. This has general applicability to any competitive market. The issue here is that potential supply has a finite

Aspects to promote administrative reforms, Aspects to promote administrativ...

Aspects to promote administrative reforms: Following aspects to promote administrative reforms:  1) A closer focus on results in terms of efficiency and effectiveness, and

Financial economies, Financial Economies: These are benefits obtained...

Financial Economies: These are benefits obtained by large firms as a result of contracting credit from financial institutions at lower interest rates than smaller firms. The

Economics, Ask questiowhat are the importance of the branches of economics

Ask questiowhat are the importance of the branches of economics

#title, what is marginal costs?

what is marginal costs?

Production having two outputs - economies of scope, Production having Two O...

Production having Two Outputs -Economies of Scope *  Economies of scope exist when joint output of a single firm is greater than the output which could be achieved by two diffe

Firms in a competitive markets, illustrate a long-run equilbrium using diag...

illustrate a long-run equilbrium using diagrams for the gold market and for a representative gold mine

Marginal product, I am having a hard time figuring out how to find marginal...

I am having a hard time figuring out how to find marginal product.

Loanable funds and supply of loanable funds, Another school of thought deve...

Another school of thought developed what is called loanable funds theory of interest. Among the principle economists who contributed to the development of loanable funds theory men

Indifference curve, What is indifference curve and its properties?

What is indifference curve and its properties?

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd