Special drawing rights - imf, Microeconomics

Assignment Help:

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.  

 


Related Discussions:- Special drawing rights - imf

Define the concepts price elasticity of demand, Question 1: Define the ...

Question 1: Define the concepts price elasticity of demand, income elasticity of demand and cross elasticity of demand and explain how these concepts can be useful to the man

Define price elasticity of demand, What is the mathematical definition of p...

What is the mathematical definition of price elasticity of demand The price elasticity of demand is the percentage alters in quantity demanded divided by the percentage change

Government, A government official announces a new policy. The country wishe...

A government official announces a new policy. The country wishes to eliminate its trade deficit, but will strongly encourage financial investment from foreign firms. Explain why su

Physical chemistry, Calculate the enthalpy change for stepE. that is for th...

Calculate the enthalpy change for stepE. that is for the reaction: Na(s)+ water (arrow) Na(ion)+ OH(ion)+ Hydrogen (g)

Oligopoly, characteristics and models of oligopoly by Sweezy,cournot and ed...

characteristics and models of oligopoly by Sweezy,cournot and edgework

Describe customer-firm relationship, Question 1: "The rush of new and e...

Question 1: "The rush of new and existing enterprises to exploit the opportunities presented by the internet economy is giving rise to new business models". Discuss. Ques

What are economic and social costs of high inflation level, What are the ec...

What are the economic and social costs of high inflation levels? High inflation will have serious redistribution costs; make distortions to the economy; decrease international

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