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IMF looks to use existing reserve assets rather than create more
[MEXICO CITY] The International Monetary Fund (IMF) is looking at ways to mobilise existing reserve assets rather than create new ones to help countries deal with the economic fallout of the global pandemic.
The fund is doing a "quite a bit" of internal work to figure out how to use existing special drawing rights, or SDRs, to replicate the impact of creating more of them, first managing director Geoffrey Okamoto said on a conference call on Tuesday. A proposed US$500 billion SDR allocation was blocked in April by the IMF's biggest shareholder, the US.
"While I think myself and others would be interested in a general SDR allocation, we are exploring every available option to make sure that we effectively get the benefit of an SDR allocation but with the existing stock that we currently have," Mr Okamoto said. "There's quite a bit of internal work being done on this at the moment. I don't want to preview too much," he added.
Managing director Kristalina Georgieva had previously said that the IMF wants to find ways to get SDRs from rich countries that don't need them to poorer nations that do.
US Treasury Secretary Steven Mnuchin said in April that the Trump administration opposed the plan to create more reserve assets because they are allotted to countries in proportion to their IMF voting share. This means 70 per cent would go to G-20 countries that don't need the help and just 3 per cent to the poorest developing nations.