A Development-Focused Allocation of the Special Drawing Rights

Abstract

The original purpose of the Special Drawing Rights (SDRs) of the International Monetary Fund (IMF) was to increase international liquidity, but here the emphasis is on the potential role of SDR creation in providing funds for development finance. The chapter describes the historical development of 'regular' SDRs, including their purpose and the problems associated with their creation and allocation. It then introduces the recent proposals for development-oriented SDRs, and analyses these proposals with a focus on the arguments for and against them. Next, the mechanisms proposed for the creation of development SDRs are discussed, including the institutional and structural changes in international finance that may support their creation. The concluding section of the chapter assesses the effects of development SDRs on the resource situation in poor (developing) countries and how they will be perceived. © Oxford University Press, 2013.