Low-Income Countries and an SDR-Based International Monetary System
Open Economies Review, Springer, Vol. 23 (1), pp. 129-150, 2012
Posted: 24 Jan 2014
Date Written: February 1, 2012
The global financial crisis, the weakening role of the dollar and the increasing international importance of China are calling for a reform of the international monetary system in the direction of greater multilateralism. To this end, we advance a proposal based on a greater role of the Special Drawing Rights (SDRs) and focus on the potential benefits that these could bring to Low-Income Countries (LICs). SDRs would be created exogenously - with a disproportionate allocation to LICs - but also endogenously, through a substitution account and an overdraft facility. Finally, the paper discusses the superiority of this proposal in the context of the current foreign assistance framework.
Keywords: International monetary system, low-income countries, SDR, Key-currencies, reserves
JEL Classification: 011, 019, F55, F35, F33
Suggested Citation: Suggested Citation