Larry White Blog | IMF to Study SDR Denominated Assets that Could be "Held by any Parties" | Talkmarkets
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Over 35 years experience working in oil and gas accounting with privately held oil and gas producing companies. Also have a blog that covers monetary system issues and the potential for major future monetary system change. (http://lonestarwhitehouse.blogspot.com/)  - email: ... more

IMF to Study SDR Denominated Assets that Could be "Held by any Parties"

Date: Monday, July 18, 2016 5:11 PM EDT

Recently, the IMF released this Report of the Managing Director (Christine Lagarde) to the IMF Board of Governors. The report is done by the Managing Director to make a recommendation "relating to a general allocation or cancellation of Special Drawing Rights (SDRs).

 


Regular readers here understand what SDRs are, but if you are new to this blog you may want to look over this page of articles on the subject of the SDR. In this report, I want to focus on just one item (#27) on page 15 of the report. Below I have pasted in this item (#27) and further below I have added some comments.

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27. A forthcoming Board paper will look into the evolution of the SDR and its potential future role in addressing some of the IMS’s vulnerabilities. In particular, the paper will analyze if greater use of the SDR—including SDR-denominated assets, which could be both issued and held by any parties—could help reduce global imbalances and mitigate the impact of financial market volatility. The outcome of this discussion could result in proposals to modify the existing framework set forth in the Fund’s Articles of Agreement for general SDR allocations or cancellations. The paper will also review whether there is scope for the SDR to strengthen the capacity of the GFSN (Global Financial Safety Net), complementing other work streams, including on the Fund’s lending facilities. 


(I added the underlines for emphasis)

 

Click here to read the full report

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My added comments: Item #27 above caught my attention for a couple of reasons. First, we watch for any signs here that any kind of expanded role for the SDR is in progress. Secondly, we are interested in anything that may suggest that it is possible for the SDR to become a global reserve currency that regular citizens can own and not just banking entities and governments.

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