Developed by the international monetary fund to cope with universally floating exchange rates, Special Drawing Rights (SDRs) represent an average base of value derived from the value of a group of major currencies.
<h3>What is Special Drawing Rights (SDRs)?</h3>
Special Drawing Rights (SDRs) is an international reserve asset created by the IMF to supplement its member countries' official reserves. The SDR is not a monetary unit.
Special Drawing Rights (SDRs) are an asset, but not money in the traditional sense because they cannot be spent. An SDR's value is determined by a basket of the world's five major currencies: the US dollar, euro, yuan, yen, and British pound. The Special Drawing Rights (SDRs) is a stable asset in countries' international reserves as well as an accounting unit for IMF transactions with member countries.
The IMF can manage the exchange rate volatility of any single currency by holding this basket of major currencies.
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