Rescue by Helicopter Reserves – Economic News, Analysis, and Discussion

The world woke up on Monday 23 with higher international reserves for all countries. A new allocation of US$650 billion (SDR450 billion) in Special Drawing Rights (SDRs) by the International Monetary Fund (IMF) to its member countries has entered into force.

SDRs are an international reserve asset created by the IMF and added to the countries’ other foreign reserves. It is not a currency that can be used by private agents. Governments, on the other hand, can – unconditionality – exchange them for currencies from other countries and thus make payments with them. It is, therefore, a supplement to the countries’ foreign reserves, without depending on the issuance of external or domestic debt for its acquisition.

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