Special Drawing Rights

IN NEWS:

• India blocked a proposal by the IMF to issue an additional 500 billion of Special Drawing Rights (SDRs).

SPECIAL DRAWING RIGHTS:

• SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves.
• SDR serves as the unit of account of the IMF
• A basket of currencies determines the value of the SDR. They are the US dollar, Euro, Japanese yen, Chinese renminbi and British pound sterling.
• SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies.

PRELIMS QUESTION:

Q. Consider the following statements regarding Special Drawing Rights:  

1. It is an international reserve asset created by the IMF
2. It can be exchanged for any currency recognized in the international market

Choose the correct statements from the codes given below:  

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer to Prelims question