What are Special Drawing Rights?
How are they designed to supplement the existing reserve currencies?
Special Drawing Rights, or SDRs, are a type of international reserve asset created by the International Monetary Fund (IMF) in 1969. SDRs are designed to supplement the existing reserve currencies, such as the US dollar, euro, yen, and pound sterling, and to provide a stable store of value for countries to use in international transactions.
The value of SDRs is based on a basket of five major currencies: the US dollar, euro, Chinese renminbi, Japanese yen, and British pound. The value of the SDR is determined by the value of these currencies, and is reviewed and adjusted every five years by the IMF.