The COVID-19 crisis has created a serious liquidity crisis in some low-income countries that are unable to mount massive domestic stimulus efforts.
To address this challenge, those countries, along with development advocates, have been pushing the International Monetary Fund to agree to a new issuance of Special Drawing Rights.
SDRs have increasingly been in the news as discussions about a potential issuance have heated up at the G-20 and G-7 groups of nations — and, most recently, at IMF itself. In fact, news emerged last week that a new issuance of about $650 billion is likely, with IMF planning to present a proposal to its directors by June.
But SDRs, a global reserve asset, are somewhat complicated and often misunderstood.
In this video, Devex explains what they are, how they work, and how they can be a tool to respond to the COVID-19 crisis.