SDRs are international reserve assets created by the IMF to supplement the official reserves of its members. They can be exchanged for freely usable currencies. The value of SDRs is determined by a basket of currencies and is used by IMF members engaging in transactions and for determining interest rates on SDR holdings. While SDRs help improve international liquidity and stability without reliance on gold, some criticize their inequitable distribution and failure to meet liquidity needs or promote development.

2. ZEAL GROUP
OUTLINES Of SDR’s
Introduction
Meaning
Uses
Values
Cost Involved
Interest Rates
Principles
Additional uses
Merits
Critisisms

3. INTRODUCTION OF SPCIAL DRAWING RIGHTS
SDR were created by the IMF in 1969 and were
intended to be an asset held in foreign exchange
reserve under the Brettonwoods system of fixed
exchange rates
All powers of the IMF are vested in the Board of
Governs.

4. MENING OF SDR’s
SDR is an interest bearing international
reserve asset created by IMF in 1969 to supplement
other reserve of member
countries.
The SDR based on a basket of International currency
comprising the US Dollar ,Japense,yen,euro &pound
sterling.
It is not a currency not a cliam on the IMF but it is a
potentially a cliam on freely usable currency of IMF
members.

5. USES OF SDR
• SDR is an international unit of account
• SDR is on international monetary asset
• Transactions in various methods
• SDR used on the means of payment
• They can’t be used for any other purpose

6. VALUE OF SDR
The value of the SDR was initially defined as
equivalent to 0.888671 grams of fine gold.
SDR is defined as basket consisting of:
US Dollars : 63.2 cents(41.9%)
Euro : 41.0 euro cents(37.4%)
Yen : 18.4 yen(11.3%)
Pound Sterling : 9.03 pence(9.4%)
Basket6 is recalculated after every 5 yrs.

7. Costs Involved in using the SDRs
• The IMF pays Interest to each holder of SDRs,
and it makes charges at the same rate on each
participants net cumulative SDR allocations.
• Interest on SDR holdings and allocations are
received and paid quarterly.

8. SDR Interest Rate and how it is determined?
• The SDR Interest Rate is determined Weekly
on each friday.
• It is based on a weighted average of
representative interest rates on 3 month debt
in the money markets of the four SDR basket
currencies (i.e, the U.S. Dollar, Japanese yen,
euro and pound sterling.)

9. PRINCIPLES OF SDR
• Transactions with designation
• Transactions with general account
• Transactions by agreement

10. ADDITIONAL USES OF SDR’s
• Swap arrangement
• In forward operation
• In loan
• In the settlement of financial obligation
• As security for the performance or financial
obligation

11. MERITS OF SDR
1. SDR’s are new form of international
monetory reserve.
2. No dependence on the supply of gold
3. It can’t be demonitized.
4. Unlike gold, SDR’s are costly to process

12. 5. SDR improves international liquidity
6. No need to change domestic economic
policy
7. Easier and more flexible
8. Act as a both unit of account and means of
payment

13. CRITISISIMS OF SDR
1. In-equitable distribution
2. Not linked with development finance
3. High interest rates
4. Failure to distribute social saving
5. Failure to meet international liquidity requirement

14. CONCLUSION
Hence SDR is used to solve the international
monetary problems such as balance of
payment.
It holds reserves in central bank and finance the
government.

15. Presented By
• Divya
• Gowthami
• Nagaratna
• Swathi
• Shambhavi
• Arpitha
• Malashree
• Shruthi
• Sangaiha
• Sai Rama
• Janaki
• Anil
• Supriya