Definition

Noun: 1. A type of international reserve asset: Special Drawing Rights (SDR) are an international reserve asset created by the International Monetary Fund (IMF) to supplement the official reserves of its member countries. 2. A unit of account: The SDR serves as the IMF's unit of account and is not a currency, nor a claim on the IMF itself, but rather a potential claim on the freely usable currencies of IMF member countries.

Usage

• Special Drawing Rights are allocated to member countries by the IMF and can be exchanged among governments for freely usable currencies to settle international obligations.
• The value of an SDR is based on a basket of major international currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Examples

• Noun:
  • The IMF approved a general allocation of Special Drawing Rights to boost global liquidity during the economic crisis.
  • The country's foreign reserves are reported in terms of US dollars and Special Drawing Rights.
  • The value of the Special Drawing Right is calculated daily based on the currency basket.

Advanced Usage

• "SDR allocation": The process by which the IMF issues new SDRs to its member countries in proportion to their IMF quotas.
  • The new SDR allocation provided crucial reserve assets to many developing economies.
• "SDR-denominated": Used to describe financial instruments or obligations whose value is tied to the SDR.
  • The bond was issued as an SDR-denominated instrument to hedge against currency volatility.

Variants and Related Words

• SDR (n): The common acronym for Special Drawing Rights.
  • The latest financial report shows an increase in SDR holdings.
• Reserve asset (n): An external asset that is readily available to and controlled by a country's monetary authorities for financing payment imbalances. SDRs are one type of reserve asset.
• Basket of currencies (n): A selected group of currencies whose weighted average is used to define the value of another unit, such as the SDR.

Synonyms

• International reserve asset: A broader term for assets held by central banks, which includes SDRs, foreign currency reserves, and gold.
• IMF reserve asset: A more specific synonym highlighting the creating institution.

Related Terms and Concepts

• IMF Quota: A member country's financial commitment to the IMF, which determines its voting power and its share of SDR allocations.
• Freely Usable Currency: A currency that is widely used to make payments for international transactions and is widely traded in the principal exchange markets. SDRs can be exchanged for these currencies.

Noun

1. reserve assets in the International Monetary Fund; designed to supplement reserves of gold and convertible currencies used to maintain stability in the foreign exchange market