Recently, which one of the following currencies has been proposed to be added to the basket of IMF’s SDR?
[UPSC Civil Services Exam – 2016 Prelims]
(a) Rouble
(b) Rand
(c) Indian Rupee
(d) Renminbi
Answer: (d)
Explanation:
- The Special Drawing Rights (SDR) is an international reserve asset that was established by the International Monetary Fund (IMF) in 1969.
- SDRs serve as a form of artificial currency, designed to complement global liquidity.
- It is important to note that SDRs do not represent a specific currency or a claim on the IMF itself. Instead, they are intended to supplement the existing reserves held by member countries of the IMF.
- For a currency to be included in the SDR basket, it must meet certain criteria. These criteria include being freely usable, widely used, and widely traded in international markets.
- The U.S. dollar, the euro, British pound and the Japanese yen form the SDR basket.
- Chinese renminbi (RMB) was included in the SDR basket as the fifth currency in the year 2016.