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Financial crisis revives interest in special drawing rights

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  • Simona E. Cociuba

Abstract

The financial crisis that began in mid-2007 brought renewed calls for an alternative to the U.S. dollar as the dominant reserve currency in international transactions. Several developing countries suggested greater use of special drawing rights (SDRs). ; SDRs were created in 1969 under the first amendment of the International Monetary Fund (IMF) Articles of Agreement to supplement member countries' international reserves. Nine years later, the IMF set the long-term objective of making the SDR "the principal reserve asset in the international monetary system." To date, the SDR hasn't fulfilled that lofty aspiration. While the dollar's supremacy isn't likely to fade soon, a substantial allocation of SDRs in 2009 brought them back into the spotlight. ; Today, increasing the SDR's popularity would require more regular allocations and agreement on the same difficult issues that stalemated previous negotiations. It remains to be seen whether recent SDR allocations were a short-term response to the global crisis or the first of many steps in monetary system reform.

Suggested Citation

  • Simona E. Cociuba, 2010. "Financial crisis revives interest in special drawing rights," Economic Letter, Federal Reserve Bank of Dallas, vol. 5(oct).
  • Handle: RePEc:fip:feddel:y:2010:i:oct:n:v.5no.10
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