BANKING AFFAIRS

Detailed explanation-1: -Special Drawing Rights (SDRs): International reserve assets are created and administered by the IMF in 1970. These are often called ‘Paper Gold’ and they designed to supplement gold and dollars in setting international BoP accounts, so these are well known as Book keeping entry only.

Detailed explanation-2: -The Special Drawing Right (SDR) is an interest-bearing international reserve asset created by the IMF in 1969 to supplement other reserve assets of member countries. The SDR is based on a basket of international currencies comprising the U.S. dollar, Japanese yen, euro, pound sterling and Chinese Renminbi.

Detailed explanation-3: -The SDR is an international reserve asset. The SDR is not a currency, but its value is based on a basket of five currencies-the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Detailed explanation-4: -Notes: SDR was created by the IMF in 1969 as a supplementary international reserve asset. Technically SDR is not a currency. The value of SDR is based on the basket of the four major currencies – US Dollar, Euro, UK Pound and Japanese Yen.

Detailed explanation-5: -The IMF uses the SDR as its unit of account for all transactions. Drawing on the IMF by a country raises the fund’s holdings of that country’s currency but lowers its holdings of another country’s currency by an equal amount.