PHOTO: COURTESY OF JOSE ANTONIO OCAMPO
THIS YEAR’S 75TH ANNIVERSARY of the Bretton Woods conference that created the IMF and World Bank coincided with the half-century celebration of the inclusion of the Special Drawing Right (SDR) in the IMF Articles of Agreement.
We also saw in 2019 the spread of crypto-assets and the launch of Facebook’s proposal to create Libra, a global digital currency based on blockchain technology. Central banks are actively discussing issuing digital national currencies, and former IMF Managing Director Christine Lagarde raised the possibility of launching a digital version of the SDR.
In this brave new world, is it time to rethink the SDR’s role?
The SDR—created 50 years ago to supplement IMF member countries’ official reserves—is the only true global money, backed by all IMF members. The IMF’s Articles of Agreement envisioned it as “the principal reserve asset in the international monetary system.” But the SDR has turned out to be one of the most underutilized instruments of international cooperation. A more active use of this tool would significantly strengthen the IMF’s role as the center of the global financial safety net.