What is the role of the SDR?

Editor:AT0086| Resource:China Daily

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Chinese yuan or renminbi (RMB) has been included into the basket of special drawing right(SDR) of the International Monetary Fund (IMF) since Oct 1, marking a milestone in theinternationalization of the RMB. Here are seven things you need to know about the addition ofRMB to the SDR.

What is the role of the SDR?

Seven things you need to know about yuan's inclusion in SDR basket

A photo shows five major currencies in the basket of SDR. [Photo/VCG]

The SDR was created by the IMF in 1969 as a supplementary international reserve asset, in thecontext of the Bretton Woods fixed exchange rate system.

As the Bretton Woods system collapsed and the major currencies shifted to floating exchangerate regimes, the reliance on the SDR as a global reserve asset lessened. However, the SDRallocation totaling SDR 182.6 billion in 2009 played a critical role in providing liquidity to theglobal economic system and supplementing member countries' official reserves amid the globalfinancial crisis.

In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account ofthe IMF and some other international organizations.

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