What next for Special Drawing Rights?

In August 2021, the International Monetary Fund (IMF) created USD $650 billion in Special Drawing Rights (SDRs), an international reserve currency, to respond to urgent financing needs triggered by the Covid-19 pandemic. SDRs were distributed to almost all countries without policy conditions attached.

While their distribution was incredibly unfair, based on the quota-based governance structure of the IMF, and meant that rich countries received over 60% while low-income countries received less than 4%, for many developing countries, it was the largest source of external financing received during the crisis.