The International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) equivalent to $650 billion to boost global liquidity and will become effective on 23rd August 2021.
This is the largest SDR allocation in the history of the IMF and will be credited to IMF member countries in proportion to their existing quotas in the Fund.
According to IMF Managing Director Kristalina Georgieva, the SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.
About $275 billion of the new allocation will go to emerging markets and developing countries, including low-income countries.
The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries. The SDR is not a currency. It is a potential claim on the freely usable currencies of IMF members. As such, SDRs can provide a country with liquidity. A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.
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