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The SDR and Its Potential as an International Reserve Asset


  • Chelsky, Jeff

    () (World Bank)


Since the onset of the global financial crisis, there has been an upswing of interest among some prominent policy makers and academics in the International Monetary Fund’s (IMF) Special Drawing Right (SDR) as a “safe” international reserve asset. But preexisting constraints on the SDR and the magnitude of support required to push through the reforms necessary to enhance the SDR’s role make it unlikely that ambitious aspirations for this “quasi-currency” will be realized. Moreover, the case for enhancing the SDR’s role has been somewhat overstated, as has the view that the current international monetary system requires the dominance of a single currency, namely the U.S. dollar. To a significant extent, U.S. dollar dominance is the result of specific policy choices by individual countries (for example, export-led growth strategies, close links to the U.S. dollar) rather than an inherent rigidity in the international monetary system. Many of the problems that some policy makers are seeking to address through a greater role for the SDR can more easily be achieved in the context of the continuing trend to a multicurrency reserve system.

Suggested Citation

  • Chelsky, Jeff, 2011. "The SDR and Its Potential as an International Reserve Asset," World Bank - Economic Premise, The World Bank, issue 58, pages 1-6, May.
  • Handle: RePEc:wbk:prmecp:ep58

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    References listed on IDEAS

    1. Alderman, H. & Paxson, C.H., 1992. "Do the Poor Insure? A Synthesis of the Literature on Risk and Consumption in Developing Countries," Papers 164, Princeton, Woodrow Wilson School - Development Studies.
    2. Sugawara, Naotaka & Sulla, Victor & Taylor, Ashley & Tiongson, Erwin R., 2010. "The Crisis Hits Home: Stress-Testing Households in Europe and Central Asia," World Bank - Economic Premise, The World Bank, issue 12, pages 1-4, May.
    3. World Bank, 2009. "Armenia : Implications of the Global Economic Crisis for Poverty," World Bank Other Operational Studies 3119, The World Bank.
    4. Meral Karasulu, 2008. "Stress Testing Household Debt in Korea," IMF Working Papers 08/255, International Monetary Fund.
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    More about this item


    IMF; currency; reserves; international reserves; exchange rates; bretton woods; dollar; euro; yen; China;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • F3 - International Economics - - International Finance
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions


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