Does the SDR System Generate Permanent Resource Transfers?

International Monetary Fund

No 1988/033, IMF Working Papers from International Monetary Fund

Abstract: The paper analyzes whether the SDR system generates permanent resource transfers—i.e., transfers of resources that do not involve equivalent quid pro quos. It is argued that SDR allocation only gives rise to permanent resource transfers if the SDR interest rate is uncompetitive or if holding SDRs is perceived to be risky, and that the use of SDRs gives rise to permanent resource transfers only if the SDR interest rate is uncompetitive. These conclusions are reconciled with the fact that SDR allocation can provide reserves to many countries at terms more favorable than the costs of borrowing or earning reserves.

Keywords: WP; SDR; resource; SDR allocation; reserve asset; resource transfer (search for similar items in EconPapers)
Pages: 30
Date: 1988-01-01
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