Editing Special drawing rights (section)

==History==
Special drawing rights were created by the IMF in 1969 and were intended to be an asset held in [[foreign exchange reserves]] under the [[Bretton Woods system]] of fixed exchange rates.<ref name=factsheet/> After the collapse of that system in the early 1970s, the XDR has taken on a less important role.<ref name="less imp">{{cite web
|title=How to solve the problem of the dollar
|author=Fred Bergsten
|website=Financial Times
|date=December 10, 2007
}}</ref> Acting as the [[unit of account]] for the IMF has been its primary purpose<ref  name=white7/> since 1972.<ref  name=white2/>

The IMF itself calls the current role of the XDR "insignificant".<ref  name=p1/> [[Developed country|Developed countries]], who hold the greatest number of XDRs, are unlikely to use them for any purpose.<ref  name=white1/> The only actual users of XDRs may be those [[developing country|developing countries]] that see them as "a rather cheap [[line of credit]]".<ref>{{Citation
 |last       = McKinnon
 |first      = Ronald
 |title      = Reconsidering XDRs
 |newspaper  = Harvard International Review
 |pages      = 7
 |date       = Spring 2009
 |url        = http://hir.harvard.edu/frontiers-of-conflict/reconsidering-XDRs
 |access-date = June 19, 2011
}}{{dead link|date=May 2018 |bot=InternetArchiveBot |fix-attempted=yes }}</ref>

One reason XDRs may not see much use as foreign exchange reserve assets is that they must be exchanged into a currency before use.<ref  name=white5/> This is due in part to the fact private parties do not hold XDRs:<ref  name=white5/> they are only used and held by IMF member countries, the IMF itself, and a select few organizations licensed to do so by the IMF.<ref name=prescribedholders/> Basic functions of foreign exchange reserves, such as market intervention and liquidity provision, as well as some less prosaic ones, such as maintaining export competitiveness via favorable exchange rates, cannot be accomplished directly using XDRs.<ref  name=p7/> This fact has led the IMF to label the XDR as an "imperfect reserve asset".<ref  name=p4/>

Another reason they may see little use is that the number of XDRs in existence is relatively few compared to the total amount of [[foreign exchange reserves]]. To function well a foreign exchange reserve asset must have sufficient [[Market liquidity|liquidity]], but XDRs, because of their small number, may be perceived to be an illiquid asset. The IMF says, "expanding the volume of official XDRs is a prerequisite for them to play a more meaningful role as a substitute reserve asset."<ref  name=p6/>

===Alternative to U.S. dollar===
The XDR comes to prominence when the U.S. dollar is weak or otherwise unsuitable to be a foreign exchange reserve asset. This usually manifests itself as an allocation of XDRs to IMF member countries. Distrust of the U.S. dollar is not the only stated reason allocations have been made, however. One of its first roles was to alleviate an expected shortfall of U.S. dollars {{circa|1970}}.<ref  name=white2/> At this time, the United States had a conservative monetary policy<ref  name=white2/> and did not want to increase the total amount of U.S. dollars in existence.{{citation needed|date=June 2011}} If the United States had continued down this path, the dollar would have become a less attractive foreign exchange reserve asset: it would not have had the necessary [[Market liquidity|liquidity]] to serve this function. Soon after XDR allocations began, the United States reversed its former policy and provided sufficient liquidity.<ref  name=white2/> In the process a potential role for the XDR was removed. During this first round of allocations, 9.3 billion XDRs were distributed to IMF member countries.

The XDR resurfaced in 1978 when many countries were wary of taking on more foreign exchange reserve assets denominated in U.S. dollars. This suspicion of the dollar precipitated an allocation of 12 billion XDRs over a period of four years.<ref  name=white3/>

Concomitant with the [[2008 financial crisis]], the third round of XDR allocations occurred in the years 2009<ref name=factsheet/> and 2011.<ref name=20billion/> The IMF recognized the financial crisis as the cause for distributing the large majority of these third-round allotments, but some allocations were couched as distributing XDRs to countries that had never received any<ref name=factsheet/> and others as a re-balancing of IMF quotas, which determine how many XDRs a country is allotted, to better represent the economic strength of [[emerging markets]].<ref name=20billion/>

During this time China, a country with large holdings of U.S. dollar foreign exchange reserves,<ref>{{Cite web
|url=http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html |archive-url=https://ghostarchive.org/archive/20221210/http://www.ft.com/cms/s/0/7851925a-17a2-11de-8c9d-0000779fd2ac.html |archive-date=2022-12-10 |url-access=subscription
|website=Financial Times
|title=China calls for new reserve currency
|date=March 23, 2009
|author=Jamil Anderlini
}}</ref> voiced its displeasure at the current international monetary system, and promoted measures that would allow the XDR to "fully satisfy the member countries' demand for a reserve currency."<ref>{{Cite web
|url=http://www.pbc.gov.cn/publish/english/956/2009/20091229104425550619706/20091229104425550619706_.html
|archive-url=https://web.archive.org/web/20100922100938/http://www.pbc.gov.cn/publish/english/956/2009/20091229104425550619706/20091229104425550619706_.html
|archive-date=September 22, 2010
|website=People's Bank of China
|title=Reform the International Monetary System
|date=March 23, 2009
|author=Zhou Xiaochuan
}} [http://www.bis.org/review/r090402c.pdf Alt URL]</ref> These comments, made by a chairman of the People's Bank of China, [[Zhou Xiaochuan]], drew media attention,<ref>{{Cite web
|url=https://www.reuters.com/article/wtUSInvestingNews/idUSLJ93633020090319 |title=China backs talks on dollar as reserve
|website=Reuters
|date=March 19, 2009
}}
*{{Cite news
|url=http://www.economist.com/finance/displayStory.cfm?story_id=13382566&source=features_box2
|title=China questions the dollar's role as a reserve currency
|date=March 26, 2009
|newspaper=The Economist
}}</ref> and the IMF showed some support for China's stance. It produced a paper exploring ways the substance and function of the XDR could be increased.<ref  name=p1/> China has also suggested the creation of a substitution account to allow exchange of U.S. dollars into XDRs.<ref  name=white1/> When substitution was proposed before, in 1978, the United States appeared reluctant to allow such a mechanism to become operational.<ref name="white3" />

=== Use by developing countries ===
In 2001, the UN suggested allocating XDRs to [[developing country|developing countries]] for use by them as cost-free alternatives to building foreign exchange reserves through borrowing or running [[Current account (balance of payments)|current account]] surpluses.<ref name="un">{{Cite conference
  |title = High-Level Panel on Financing for Development&nbsp;— Recommendations & Technical Report
  |publisher = United Nations
  |date = June 26, 2001
  |pages = 27, 58–59
  |url = https://www.un.org/esa/ffd/a55-1000.pdf
  |id = A/55/1000
  |access-date =June 18, 2011}}
</ref> In 2009, an XDR allocation was made to countries that had joined the IMF after the 1979–1981 round of allocations was complete (and so had never been allocated any).<ref name=factsheet /> First proposed in 1997,<ref>{{Cite web
  |title = IMF Executive Board Agrees XDR Allocation Proposal
  |publisher = International Monetary Fund
  |date = September 20, 1997
  |url = http://www.imf.org/external/np/sec/pr/1997/pr9745.htm
  |access-date =June 24, 2011}}</ref> many of the beneficiaries of this 2009 allocation were developing countries.{{efn|Countries that joined the IMF post-1981 include: Albania (1991),<ref>{{Cite web |title = Resident Representative Office in Albania |publisher = International Monetary Fund |url = http://www.imf.org/external/country/alb/rr/index.htm |access-date =June 24, 2011}}</ref> Angola (1989),<ref>{{Cite web |title = Resident Representative Office in Angola |publisher = International Monetary Fund |url = http://www.imf.org/external/country/ago/rr/index.htm |access-date =June 24, 2011}}</ref> Antigua and Barbuda (1982),<ref name="eccu">{{Cite news | title = Eastern Caribbean Currency Union (ECCU) |newspaper = Imf |publisher = International Monetary Fund | url = http://www.imf.org/external/region/ecc/rr/index.htm |access-date =June 24, 2011}}</ref> Armenia (1992),<ref>{{Cite web |title = Resident Representative Office in Armenia | publisher = International Monetary Fund |url = http://www.imf.org/external/country/ARM/rr/index.htm |access-date =June 24, 2011}}</ref> Azerbaijan (1992),<ref>{{Cite web |title = IMF Local Office in Azerbaijan| publisher = International Monetary Fund |url = http://www.imf.org/external/country/AZE/rr/index.htm |access-date = June 24, 2011}}</ref> Belarus (1992),<ref>{{Cite web |title = Resident Representative Office in Belarus |publisher = International Monetary Fund |url = http://www.imf.org/external/country/BLR/rr/index.htm| access-date =June 24, 2011}}</ref> Belize (1982),<ref>{{Cite web |title = Belize: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=62&date1key=2011-06-25 |access-date = June 24, 2011}}</ref> Bosnia and Herzegovina (1992),<ref>{{Cite web |title = Resident Representative Office in Bosnia and Herzegovina |publisher = International Monetary Fund |url = http://www.imf.org/external/country/BIH/rr/index.htm |access-date = June 24, 2011}}</ref> Brunei Darussalam (1995),<ref>{{Cite web |title = Brunei Darussalam: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund | url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=91&date1key=2011-06-25 |access-date =June 24, 2011}}</ref> Bulgaria (1990),<ref>{{Cite web |title = Resident Representative Office in Bulgaria |publisher = International Monetary Fund |url = http://www.imf.org/external/country/bgr/rr/index.htm |access-date = June 24, 2011}}</ref> Croatia (1992),<ref>{{Cite web |title = Croatia, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund }}</ref> Czech Republic (1993),<ref name="eceu">{{Cite web |title = Regional Resident Representative Office for Central and Eastern Europe |publisher = International Monetary Fund |url = http://www.imf.org/external/region/bal/rr/index.htm |access-date = June 24, 2011}}</ref> Eritrea (1994),<ref>{{Cite web |title = Eritrea: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=286&date1key=2011-06-25 |access-date = June 24, 2011}}</ref> Estonia (1992),<ref name="eceu" /> Georgia (1992),<ref>{{Cite web |title = Resident Representative Office in Georgia |publisher = International Monetary Fund |url = http://www.imf.org/external/country/GEO/rr/index.htm |access-date = June 25, 2011}}</ref> Hungary (1982),<ref name="eceu" /> Kazakhstan (1992),<ref>{{Cite web |title = Kazakhstan, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=535&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Kiribati (1986),<ref name="pi">{{Cite news |title = Resident Representative Office in the Pacific Islands |newspaper = Imf |publisher = International Monetary Fund |url = http://www.imf.org/external/region/pis/rr/index.htm |access-date = June 24, 2011}}</ref> Kosovo (2009),<ref>{{Cite web |title = Resident Representative Office in Kosovo |publisher = International Monetary Fund |url = http://www.imf.org/external/country/UVK/rr/index.htm |access-date =June 25, 2011}}</ref> Kyrgyz Republic (1992),<ref>{{Cite web |title = Resident Representative Office in Kyrgyz Republic |publisher = International Monetary Fund |date = March 20, 2009 |url =http://www.imf.org/external/country/KGZ/rr/index.htm |access-date = June 25, 2011}}</ref> Latvia (1992),<ref name="eceu" /> Lithuania (1992),<ref name="eceu" /> Macedonia (1992),<ref>{{Cite web |title = Macedonia, former Yugoslav Republic of: Financial Position in the Fund as of May 31, 2011| publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=618&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Marshall Islands (1992),<ref name="pi" /> Micronesia (1993),<ref name="pi" /> Moldova (1992),<ref>{{Cite web |title = Moldova, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=672&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Mongolia (1991),<ref>{{Cite web |title = Mongolia: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=675&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Montenegro (2007),<ref>{{Cite web |title = Montenegro, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund | url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=677&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Mozambique (1984),<ref>{{Cite web |title = Resident Representative Office in Mozambique |publisher = International Monetary Fund |url = http://www.imf.org/external/country/MOZ/rr/index.htm |access-date = June 25, 2011}}</ref> Namibia (1990),<ref>{{Cite web |title = Namibia: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=689&date1key=2011-06-26 |access-date =June 25, 2011}}</ref> Palau (1997),<ref name="pi" /> Poland (1986),<ref name="eceu" /> Russia (1992),<ref>{{Cite web |title = Resident Representative Office in Russian Federation |publisher = International Monetary Fund |url = http://www.imf.org/external/country/rus/rr/index.htm |access-date = June 25, 2011}}</ref> San Marino (1992),<ref>{{Cite web |title =San Marino, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=826&date1key=2011-06-26 |access-date =June 25, 2011}}</ref> Serbia (1992),<ref>{{Cite web |title = Resident Representative Office in Serbia| publisher = International Monetary Fund |url = http://www.imf.org/external/country/SRB/rr/index.htm |access-date = June 25, 2011}}</ref> St. Kitts and Nevis (1984),<ref name="eccu" /> Tajikistan (1993),<ref>{{Cite web |title = Resident Representative Office in Tajikistan |publisher = International Monetary Fund |date = January 2010 |url = http://www.imf.org/external/country/tjk/rr/index.htm |access-date =June 25, 2011}}</ref> Timor-Leste (2002),<ref>{{Cite web |title = Timor-Leste, The Democratic Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=265&date1key=2011-06-26 |access-date = June 25, 2011}}</ref> Tonga (1985),<ref name="pi" /> Turkmenistan (1992),<ref>{{Cite web |title = Turkmenistan, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=985&date1key=2011-06-26 |access-date =June 25, 2011}}</ref> Tuvalu (2010–as Tuvalu joined after the 2009 special allocation, it may not have received XDRs),<ref name="pi" /> Ukraine (1992),<ref>{{Cite web |title = Resident Representative Office in Ukraine |publisher = International Monetary Fund |url = http://www.imf.org/external/country/UKR/rr/index.htm | access-date =June 25, 2011}}</ref> Uzbekistan (1992),<ref>{{Cite web |title = Uzbekistan, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=1042&date1key=2011-06-26 |access-date =June 25, 2011}}</ref> and Yemen (1990).<ref>{{Cite web |title = Yemen, Republic of: Financial Position in the Fund as of May 31, 2011 |publisher = International Monetary Fund |url = http://www.imf.org/external/np/fin/tad/exfin2.aspx?memberKey1=1069&date1key=2011-06-26 |access-date = June 25, 2011}}</ref>}}

=== COVID-19 pandemic ===
On August 23, 2021, the IMF allocated $650 billion worth of XDRs to all 190 members of the IMF in proportion to member quotas in response to COVID-19 related balance of payments concerns. This allocation of XDRs represents roughly 2/3rds of all XDRs currently in circulation, and was by far the largest ever single allocation of XDRs.<ref>{{Cite web |title=2021 General XDR Allocation |url=https://www.imf.org/en/Topics/special-drawing-right/2021-SDR-Allocation |access-date=2022-08-15 |website=IMF |language=en}}</ref>