Abstract

The Special Drawing Right (SDR) was created in 1969 as an international reserve asset to supplement other reserve assets whose growth was seen as inadequate to finance the expansion of international trade and finances under the Bretton Woods system in the postwar period and to support the Bretton Woods fixed exchange rate system. The creation of the SDR was intended to make the regulation of international liquidity subject, for the first time, to international consultation and decision. The SDR is not a currency, nor is it a claim on the IMF. Instead, it is a potential claim on the freely usable currencies of IMF members. The IMF may allocate SDRs unconditionally to members (participants) who may use them to obtain freely usable currencies in order to meet a balance of payments need without undertaking economic policy measures or repayment obligations.