The Special Drawing Right (SDR) is an interest-bearing international reserve asset, not a currency, created by the International Monetary Fund (IMF) in 1969. It is a concept and a scheme designed to supplement the official reserves of IMF member countries. The SDR was established to solve the problem of insufficient gold and U.S. dollar reserves under the Bretton Woods system to support the expansion of global trade.
The SDR is a potential claim on the freely usable currencies of IMF members. Its value is determined daily by the IMF based on a basket of five major international currencies: the U.S. dollar, euro, Chinese Renminbi, Japanese yen, and pound sterling. SDRs are allocated to member countries in proportion to their quotas in the IMF. The IMF's Articles of Agreement prescribe the conditions for these allocations. The SDR also serves as the unit of account for the IMF and several other international organizations.
A significant recent change occurred on August 23, 2021, when the IMF made its largest-ever allocation of SDR 456.5 billion (equivalent to about US$650 billion) to provide global liquidity and help countries manage the impact of the COVID-19 pandemic. Furthermore, the IMF approved the use of SDRs for the acquisition of hybrid capital in May 2024. Rechanneled SDRs from countries with strong external positions are now used to support the Poverty Reduction and Growth Trust (PRGT) and the Resilience and Sustainability Trust (RST), which provide affordable financing to vulnerable countries.