ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The SDR unit of valuation is known as paper gold. SDR represents Special Drawing Rights. It is an accounting entry and measures a nation’s reserve assets with IMF.

Detailed explanation-2: -An SDR is called paper gold because at the time of its creation it was viewed as an asset that could act as a reserve asset that would supplement gold reserves and other currencies, thus the name, paper gold. International Monetary Fund. “Special Drawing Rights (SDR).” Accessed Jan. 10, 2022.

Detailed explanation-3: -Paper is a thin sheet material produced by mechanically or chemically processing cellulose fibres derived from wood, rags, grasses or other vegetable sources in water, draining the water through fine mesh leaving the fibre evenly distributed on the surface, followed by pressing and drying.

Detailed explanation-4: -Paper gold, on the other hand, is a piece of paper that is a derivative of physical gold. Some examples include gold certificates issued by banks and mints, unallocated or pooled accounts, gold mining shares, exchange traded funds (ETFs), gold futures, gold options, and contracts for difference.