Currency basket avg. Special Drawing Rights (SDR)
SDR - Special Drawing Rights (SDR) - special drawing rights - were the result of the transition of the gold exchange standard to a multicurrency market standard. (SDR) became the basis of the fourth world monetary system - , which began its operation in 1976-1978. They began to be produced in 1970.
Characteristics and description
The SDR has no real collateral. In other words, it is an artificially created international (supranational) reserve means of payment. The main functions are regulation of the balance of payments, replenishment of the official reserve, settlements - including credit ones - with the IMF, with its help calculations of interest on loans are carried out, etc.
IMPORTANT: Special rights borrowing is neither a currency (even a virtual one) nor a debt obligation. This is a means of payment for the IMF and nothing more. The rate of this payment instrument changes and is published daily.
The exchange rate is calculated based on a basket of currencies. Before the euro era, these were: the US dollar, the German mark, the British pound sterling, the French franc and the Japanese yen. Currently, marks and francs have given way to the euro. The proportion of the four currencies in the basket changes every five years.
The last quote is dated January 1, 2011. On that moment specific gravity currency looked like this:
1. US dollar – 41.9%
2. Euro – 37.7%
3. British pound 11.3%
4. Japanese yen – 11%.
Currently it has the status of an international collective currency. A nuance: it is used exclusively for non-cash payments between states that are members of the IMF (and there are about 160 such states in the world). Calculations are carried out by maintaining records in the appropriate accounts reflecting transactions with SDR. There are no SDR notes.
The volume of this means of payment for each specific country is set depending on the IMF capital quota of this state. Initially, the SDR was a conventional unit containing gold reserves (which was calculated in dollar equivalent).
(in English Special Drawing Rights, abbreviated SDR or SDR) are a means of payment that was artificially created by the IMF. Only non-cash form is used, in particular, entries in an account at a financial institution.
The SDR is not considered a currency or a debt obligation. It was created in 1969 as an additional financial one for the countries participating in the fund. It was assumed that this means of payment would help overcome existing contradictions between national nature and the international nature of national currencies.
History of origin
Immediately after issue, the gold content of the SDR was the same as that of the US dollar. Accordingly, the initial rate of one SDR was equal to one dollar. Two devaluations of the American currency led to an increase in the SDR rate, which slightly exceeded the value of the dollar. In addition, as a result of the collapse of the Bretton Woods system, the international community abandoned the gold standard, as a result of which national currencies were mutually dependent on each other.
Developing countries usually fix the exchange rate of their own currency to a stronger currency or determine it on the basis of a sliding parity. Important role play special drawing rights - SDR. They are one of the official reserve assets within the Jamaican Monetary System. The second amendment to the IMF Charter established the replacement of gold by the SDR as the scale of value. SDRs have become a measure of international value, an important reserve asset, and one of the means of international official settlements.
Only IMF member countries can participate in the SDR system. However, membership in the Fund does not automatically mean participation in the SDR mechanism. To carry out transactions with SDRs, the SDR Department has been established within the IMF. Currently, all member countries of the IMF are participants. At the same time, SDRs function only at the official, interstate level, at which they are put into circulation by central banks and international organizations. The IMF has the authority to create “unconditional liquidity” by issuing SDR-denominated funds to member countries of the SDR Department.
SDRs are also issued when the IMF Executive Board concludes that at this stage there is a long-term general shortage of liquid reserves and there is a need to replenish them. An assessment of this need determines the size of the SDR issue. SDRs are issued in the form of credit entries in special accounts with the IMF. SDRs are distributed among IMF member countries in proportion to the size of their IMF quotas at the time of issue. The Fund may not issue SDRs to itself or to other “authorized holders.” In addition to member countries, the IMF can receive, hold and use SDRs, as well as, by decision of the IMF Board of Governors, adopted by a majority, countries that are not members of the Fund, and other international and regional institutions (banks, monetary funds, etc.), having official status. At the same time, commercial banks and individuals cannot be their holders.
Composition of the SDR basket constantly changing. For example, on January 1, 1981, the IMF used a simplified SDR quotation based on the weighted average rate of a currency basket consisting of the following currencies: US dollar - 42%, German mark - 19%, French franc, British pound sterling, Japanese yen - 13% each.
The SDR was introduced instead of the "gold standard". The official currency price of gold was abolished, and it was also stated that it was inadmissible to establish state or interstate control over world gold markets for the purpose of artificially freezing its price. At the same time, decisions were made regarding the use of gold, which was at the disposal of the IMF. The IMF returned one sixth of the gold reserves (which amounted to 25 million troy ounces, or 777.6 tons) to the old members in exchange for their national currencies at the official price that existed before the Jamaica Agreement (35 SDR units per ounce) in proportion to their quotas in the Fund's capital. The same amount of gold was sold over a period of four years, from June 1976 to May 1980, on the free market through regularly held public auctions.
Thus, central banks were able to freely buy gold on the private market at prices prevailing there and make transactions in gold among themselves based on its market value. The previously existing obligation of IMF member countries to make a contribution to the Fund's capital in gold was also abolished. The IMF's right to demand gold from participating countries in payment of their contributions to the Fund's capital or when carrying out any transactions with these countries was eliminated.
Contrary to its intention, SDRs did not become the standard of value, the main international reserve and means of payment. SDRs are mainly used in IMF operations as a conversion factor for national currencies and the scale of currency comparisons; quotas, credits, income and expenses are expressed in this currency unit of account.
Drawing Rights (DDR)- IMF unit of account, which has a conditional character. Used to provide loans and make payments between countries. In a reserve system, special drawing rights are the amount of reserve payments different states. English name term - Special Drawing Rights. The abbreviations used are SDR, SDR, SDR.
- an artificially created means for payments and accumulation of reserves, the issuer of which is the IMF. main feature SDR is a non-cash form that looks like entries in bank accounts.
Special Drawing Rights- type of reserve currency international importance, issued as an addition to the existing gold and foreign exchange reserves.
Borrowing rights: essence, goals, history
Special Drawing Rights- a system of non-cash accounts, the holders of which can be IMF countries, system participants and other organizations (for example, large issuing banks). The use of SDR by private individuals is permitted only for calculating the amount of the contract, for example, the nominal value of securities.
History of appearance. SDRs were introduced in 1969 to complement the existing currency and gold reserves of participating countries. The main task The goal was to maintain the fixed exchange rate system of the Bretton Woods system. SDRs have their own rate, published every day based on a basket of currencies. Since 1981 (before the advent of the euro), the basket included the currencies of five countries - the USA, France, Japan, Germany, and Great Britain. Since 1999, the currencies of France and Germany have been replaced by the euro.
Objectives of Special Drawing Rights:
Introduction of a new means of payment, acting as the basis of the monetary and credit system at the international level;
Moving away from the gold coin standard to Special Drawing Rights (SDR);
Creation of a full-fledged alternative to the American dollar and gold;
Stabilization of the world economy;
Reducing the consequences associated with balance of payments imbalances in developing countries Oh;
Preventing the development of imbalances caused by distortions in balances of payments;
Introduction of a new unit of account for international structures (including the IMF).
Special Drawing Rights are neither a requirement of the IMF nor a currency. This is a requirement for the currencies of countries that are members of the IMF. SDR holders are entitled to receive these currencies in exchange for their Special Drawing Rights.
Transactions with SDR are carried out in one of two ways:
Through normal exchanges between member states of the IMF;
By appointing representative countries by the Fund that are members of the IMF and have strong positions in the foreign market. These states undertake obligations to buy drawing rights from other countries with weaker economies.
Drawing rights: cost, scope, results
The original price of Special Drawing Rights is 0.888671 g of gold. In 1969, this figure was equivalent to 1 US dollar.
Since 1973, the SDR price has been determined based on a basket of currencies. Since 1999, this basket has included the currencies of the USA, Great Britain, Japan and the EU (euro). Information on the latest price of Special Drawing Rights can be found on the official IMF website (data is updated daily).
Calculation of drawing rights is carried out based on the exchange rates for the currencies in the basket. Rates are provided daily by the London Exchange at noon.
The composition of currencies in the SDR basket is reviewed once every 5 years by the executive board (by decision of the IMF it can be done in a shorter period of time). The last revision was carried out in 2010. At the same time, the weight of currencies in the Special Drawing Rights basket has been changed based on the adjusted price of exports of services and goods, as well as the amount of currency reserves of IMF member countries. The changes took effect at the beginning of 2011. The next revision is planned for the end of 2015.
Special drawing rights can be used for:
Receipt by the country of convertible currencies, allowing to regulate the liabilities of the balance of payments. To purchase the required currency, the state that has it transfers a certain amount of funds in SDR from a personal account in the fund to an SDR account in another state. In return, the country receives currency;
Conducting transactions with the IMF (repayment of previously received SDRs in the currency of another country, making commission payments, repurchase of one’s own currency from the IMF);
Making transactions with other countries that are members of the IMF, for example, to buy back domestic currency in exchange for SDR.
Trends and results of SDR application:
Drawing rights have accumulated in the accounts of developed countries, which has caused tension in the relationship between countries with a balance of payments surplus. The reason is the need to “freeze” foreign exchange assets by the amount of SDR;
In third world countries, the available amount of SDRs has been completely exhausted;
Special Drawing Rights were no longer used to normalize the level of the balance of payments, but to cover obligations to the IMF, making payments on commissions and interest;
A new channel has emerged for introducing the American dollar into global circulation, since most of the SDR is exchanged for this currency.
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Special Drawing Rights (SDR) are an artificially created reserve and means of payment issued by the International Monetary Fund (IMF). In fact, it is not a currency, but acts as a unit of account. However, Special Drawing Rights can be exchanged by countries for money. SDRs were created in 1969 to address the shortage of gold and US dollars as the preferred reserve medium. Since then they have been used as an alternative.
The IMF allocates special drawing rights to member countries. Private organizations and individuals cannot be their holders. As of August 2009, $21.4 billion had been appropriated. Additional funds were released throughout the global financial crisis. The total amount was $182.6 billion. The main purpose of such an injection was declared to ensure liquidity of the global economic system and supplement the official reserves of member states. As of October 2014, more than 204 billion SDRs have been issued.
Name
According to standard International organization according to standardization, the SDR code is XDR. The name of the new reserve asset came from discussions about its main function - payment or credit. Original name was slightly modified during the discussion. The IMF proposed calling future SDRs “reserve drawing rights.” However, it was decided to replace the first word due to the controversial nature of the asset being created.
It should be noted that until 1981, SDRs were primarily used as debt security. That is, during this period the main function was the credit function. The International Monetary Fund required member countries to hold a certain reserve of SDRs. If some of them were used, then the state had to replenish its stock. However, in 1981 this requirement was abolished. Countries are still required to maintain their SDR reserves at a certain level, but the penalties for violations have become much less onerous.
Story
The International Monetary Fund created the SDR in 1969. It was planned that they would become an asset that would be held as a reserve. At this time, the Bretton Woods system was in effect, so fixed exchange rates were assumed. One SDR was equal to one dollar and 0.888671 grams of gold. After the collapse of the system in the early 1970s, SDRs began to play a lesser role. Since 1972, they began to be used mainly as a sign of payment between countries.
The IMF itself considers the current role of the SDR to be insignificant. It's unlikely that the developed countries will be able to use Special Drawing Rights for anything. Therefore, they are simply contained in their accounts. As for developing countries, they see SDRs as an extremely cheap means of credit. Another problem is that the holders of special drawing rights can only be IMF member states and a few licensed organizations. This is why the International Monetary Fund calls the SDR an “imperfect reserve asset.”
As an alternative to the dollar
The IMF created the Special Drawing Rights at a time when the economy was experiencing a shortage of traditional reserve currencies and gold. The use of SDRs increases when the dollar is weak. For example, this happened in the 1970s. During this period, the American economy was expected to decline. However, the United States government soon began an active monetary policy and was able to provide the necessary liquidity for its currency. During the first phase of distribution, approximately SDR 9.3 billion was allocated.
Special Drawing Rights became popular again in 1978. Many countries were suspicious of the dollar at this time, so an additional reserve was needed. During the second stage, about 12 billion SDRs were issued. The next time the role of special drawing rights increased was during the global financial crisis. This period marks the third and fourth stages of SDR distribution.
Special Drawing Right: Course
The value of the SDR is based on a basket of key international currencies, which is revised every five years. The weight assigned to each component is determined based on the specific use monetary unit as a means of payment in international trade and reserve.
During the basket revision in November 2015, the IMF decided that the Chinese yuan would be included in the list of components of the SDR. This innovation will come into force on October 1, 2016. From now on, the shares of currencies in special drawing rights will be as follows: US dollar - 41.73%, euro - 30.93%, Chinese yuan - 10.92%, Japanese yen - 8.33%, pound sterling - 8, 09%. The SDR currently has a floating rate.
Distribution
Special rights are allocated to IMF states. A country's quota is defined as the maximum volume financial resources which she is obliged to provide to the organization. To begin a new stage of SDR distribution, it is necessary that 85% of the votes be “for”. However, it should be noted that the decision-making process at the IMF has some peculiarities. One country may have, for example, 16.7% of the vote, while another may have 0.02%. This is determined based on quota. The United States of America has the greatest influence on voting. The allocation of SDRs does not occur on a regular basis, and to date there have only been four rounds of allocation.
Usage
SDRs can be used as a loan facility. However, in order to use the special drawing rights it has in its account, a country must find a government that is willing to buy them. The IMF acts as an intermediary in such a voluntary transaction. As of 2015, SDRs can be exchanged for euros, Japanese yens, pounds sterling and US dollars. The operation may take several days. Some organizations also use special drawing rights as a unit of measurement. Sometimes international agreements and treaties specify fines and prices in SDRs. Some countries peg their currencies to the Special Drawing Rights rate in hopes of making their economies appear more transparent.
