SDRs can function as a reserve currency says IMF

The world’s economy is suffering a lot. After the recession, the condition has become a little better, but still the global economy has to come up. Many countries in the Middle East are experiencing major revolutions because of troops being sent to Bahrain by Saudi Arabia and other Arab states. In Europe, the regional economy is suffering from a series of sovereign debt crises. The condition in the US is also not good. Despite the promises made by the administration under Barack Obama, the American economy is still suffering from the recession’s after-effects. There are still many people jobless, and the growing threat of inflation and its corresponding decrease in the value of the dollar has made many players in the global economy think solely about their own betterment.

Even a country like China, which is a prosperous growth engine for the world, is suffering from various problems. Inflation has made the real estate market decline, and even the price of many food products has increased. The main dilemma in the mind of the Chinese is that if they try to control inflation, their economic growth will be stopped, which they need desperately to continue their expansion as a global leader in geo-political affairs. If they do not control inflation, it will spread, and the economy will become unmanageable.

Many feel that the Anglo-American elite are letting the economic and social chaos blossom. They are doing this to give justification for transition to a global economy united by a common currency for the whole world, so the theory goes. The International Monetary Fund has kept silent on this issue. It has been proposed that SDRs constitute the beginning of the so-called global currency.

The international reserve assets which are supported by the International Monetary Fund (IMF) are known as SDRs. It is believed by many that these reserves represent claims against a currency of the IMF member countries, but it is not so. If a country wants to convert their SDRs into cash, it must also find a country which is willing to trade dollars (or other currency) for their own SDRs. The SDR includes the euro, pound, dollar and Japanese Yen. But people mostly prefer to convert SDRs into dollars as it is the most liquid of the lot, and still the world’s unofficial reserve currency. Among the dollar-denominated trades of oil and SDRs, demand for dollars has been created by a US trade agreement. This is called a Ponzi scheme.

SDRs are not alone as they are supported by the IMF’s money. This money is derived from the contributions of all 187 IMF member states. Recently, the IMF published its roadmap to make the SDRs into a defacto world reserve currency. It included all the information about the repo market, bond market and other elements which are necessary for a full-fledged currency. This was published at Davos. The IMF believes that while such a momentous conversion of world economic affairs would undoubtedly be a long term process, it is possible.