Recently, the G7 summit was held in the UK and the leaders approved the allocation of $100 billion SDRs. This money will be allocated to lower-income countries to help tackle the pandemic crisis. So recent events from around the world may indicate that we are once again a little closer to the Great Reset. Let’s take a look at what this may mean.
What are SDRs
SDRs are Special Drawing Rights. They are supplementary foreign exchange reserves defined and maintained by the International Monetary Fund (IMF). SDRs are units of account of the IMF, not currency per se. They represent a claim on the currency held by IMF member countries for which they can be exchanged. The SDR was created in 1969 to supplement the shortage of preferred foreign exchange reserve assets and was issued between 1970 and 1981. It is therefore essentially the world’s money.
The gradual replacement
Since 2009, small steps have been taking place around the world to create a platform for large SDR issuance. For example, even with the release of the plan in 2011, which was about a master plan to replace the dollar, where the SDR included the creation of a bond market, etc. US Treasuries are among the most liquid in the world. Further, the study suggested that this market would replicate the infrastructure of the US one. The inclusion of the Chinese Yuan in the SDR basket created a framework for expansion and gave China a place. So could this be a replacement plan?
US President Biden supports the allocation of SDRs, this can be gleaned from the White House statement, where we learn that the US and other G7 partners are considering multiplying the impact of the allocation of SDRs and that this particular drawdown could support health needs such as vaccinations. The IMF Managing Director, Kristalina Georgieva, expects the allocation of 650 billion SDRs to be approved in August.
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It may be that in a few years’ time, SDRs will be issued to multinational organisations for projects that are widely discussed. The important question at the moment will be whether or not the approval of the allocation of 650 billion SDRs will take place in August.