Special Drawing Rights (SDRs) are a type of international reserve asset created by the International Monetary Fund (IMF) in 1969. SDRs are not a currency, but rather a claim on the currencies of IMF member countries. The value of SDRs is based on a basket of five major currencies: the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound.SDRs serve as a supplement to the existing international monetary system and are intended to provide member countries with an additional source of liquidity during times of economic crisis. SDRs can be exchanged for freely usable currencies, such as the US dollar or the euro, and can be used to finance international trade and to help stabilize currency exchange rates.To be eligible to receive SDRs, a country must be a member of the IMF and must meet certain economic and financial criteria, such as having a strong balance of payments and a stable currency. Additionally, member countries are required to provide information on their economic and financial conditions to the IMF on a regular basis.SDRs are not widely used in international transactions and are mainly used by governments and central banks as a reserve asset. But, SDRs can play an important role in providing financial assistance to countries facing balance of payments difficulties, and in supplementing member countries' official reserves.
