Wednesday, 07 Apr 2021 06:32 PM MYT
SDRs are the IMF’s reserve asset, and are exchangeable for dollars, euros, sterling, yen and Chinese yuan or renminbi. An allocation of SDRs requires approval by IMF members holding 85 per cent of the total votes. Because the United States holds 16.5 per cent of the votes, Washington’s view is decisive.How do they work?
The value of an SDR is set daily based on a basket of five major international currencies: the US dollar , the euro , the Chinese yuan , the Japanese yen and the British pound . Economists at Morgan Stanley say there is a practical reason for the size. The IMF does not have any specific limits on SDR allocations, but US law limits the size of an SDR allocation that the Treasury Secretary can accept and vote for without pre-approval by Congress.