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Building a Better SDR

The International Monetary Fund could mitigate the worst effects of the sovereign-debt crisis currently engulfing the world’s poorest economies with a fresh allocation of its reserve asset, special drawing rights. However, for SDRs to be truly effective, the IMF must redefine what they’re good for.

NEW DELHI – With much of the developing world teetering on the edge of a debt crisis, the calls for a new issuance of special drawing rights (SDRs, the International Monetary Fund’s reserve asset), have grown louder and more urgent. But to have the desired effect, the IMF must modify its allocation criteria and clarify how SDRs can be used to support low- and middle-income countries through the current economic turmoil.