Special drawing rights - imf, Microeconomics

Special Drawing Rights:

The late 1960s witnessed that the growth in world resources did not keep pace with the growth in international trade. The slackness in the growth of resources was mainly due to the dependence on the accretion of gold to monetary reserves. It was foreboding that the slow growth of monetary resources would result in hampering the growth of international trade and in serious BOP difficulties to many countries. The need to increase the international liquidity, i.e., resources for settlement of international debts, was felt and after much thought on the subject, it resulted in the introduction of Special Drawing Rights (SDRs) in 1970. 

SDRs are entitlements 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. 

Originally, SDRs were to be utilised only for meeting BOP difficulties. But as a consequence of endavours to make it  an international unit of account, the use of SDRs has been liberalised. Now SDRs can be used directly among the members without the approval of the IMF. A country may swap SDRs with another country to acquire a currency it desires. SDRs 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 accept time deposits designated in SDRs. Some countries have pegged their currencies to SDRs.  

 

Posted Date: 11/15/2012 1:05:27 AM | Location : United States







Related Discussions:- Special drawing rights - imf, Assignment Help, Ask Question on Special drawing rights - imf, Get Answer, Expert's Help, Special drawing rights - imf Discussions

Write discussion on Special drawing rights - imf
Your posts are moderated
Related Questions
Development plan: A Development Plan is a document which contains a policy framework and programme of development for a time period for a country. It sets out the general meas

Curvature of the Iso-quant: An iso-qunat is convex to the origin. This is so because as more and more units labour are employed, the producer would prefer to give up less and

Suppose the demand curve for a consumer for coffee is: Q = 6 - 2P, where Q represents the number of cups per day and P is the price of coffee per cup.  1.  Suppose the con

Why is it considered well to bring all BOP's to zero?   If BOP of any country is zero, it reflects that the present account of that country has sufficient balance to meet the n

The Long-Run Supply of Housing * Scenario 1: Owner-occupied housing - Suburban or rural areas - National market for inputs * Questions - Is this an increasing or co

Suppose you are a regulator in charge of allocating water between residential and agricultural users (farmers) in Southern California. You conduct a survey that finds that under th

explain the fundamental task of economic system usin tomatoes as an example

Why is it true that shortages usually occur mainly when price controls are in effect? In the nonexistence of price controls the shortage generally goes away quickly because price

how a firm will choose its optimal inputs, isocosts and isoquants explanation