This is a list of the most popular articles we have written here related to the SDR used at the IMF and possible future scenarios for its use as a global reserve currency. This will make it easier for new visitors to find these articles which have generated a lot of interest from readers here. These are among the most popular articles (based on reader visits) here on the blog.
Jim Rickards has predicted that when the next major global financial crisis comes, the only "clean balance sheet" left in the world to deal with the crisis will be at the IMF. He has predicted that the SDR will be promoted as a replacement global reserve currency to the US dollar (perhaps with some gold backing or maybe not).
If you do some research on the SDR, you learn pretty quickly that while it is a somewhat obscure unit of value only used at the IMF and central banks right now, it has always had the potential to become something beyond that. If Jim Rickards forecast pans out, we will see the SDR become more prominent for sure.
Even if we do not get another major crisis, I do believe that it is possible that in the future we could the see SDR become some kind of global reserve currency. It might come in stages over time in a step by step process rather than suddenly as in a crisis. It might follow after regional areas adopt regional currencies (the African Union - AU as an example patterned after the Euro). It might even eventually be a digital version that people outside the IMF/Central bank system could use. It's also possible that the public might reject the SDR if we get another crisis and people lose confidence in the present global financial institutions. Time will tell.
If the SDR is some day used for this purpose, the more we know about it the better. It does not matter if you think it would be a great idea or if you hate the idea. There is still value in having an understanding of what the SDR is now and how it could be used in the future. With that in mind, here are links to the most popular articles we have written on this topic. The research for these articles comes both from available publications and some good sources with expert knowledge on SDR's.
February 2014 - What is an SDR? and August 2015 - Primer on SDR's
Some basic info about the SDR
June 2014 Update on KlickEx - An Asset Backed Virtual Currency?
This article is a little dated now, but still has some important information in it
July 2014 - Jim Rickards in depth on the IMF and the SDR
Jim Rickards explains his forecast in detail in this interview
December 2014 - IMF Reforms and SDR's - Why Should Anyone Care about them?
Some basic info and why people should care about it
May 2015 - Dan Popescu on the SDR, Gold, and China
Thought provoking article from Dan Popescu
June 2015 - OMFIF - Chinese SDR Inclusion Could Trigger Global Assets Shift
A reader here sent me the link to this article
****June 2015 - Dr. Warren Coats (former IMF) - A Global Currency for a Global Economy ****
Examines Dr. Coats Proposal for a "Real SDR"
**** July 2015 - Converting the SDR into Something People Can Use ****
Talks about how the SDR might some day be used outside the IMF
**** August 2015 - Roadblocks to the SDR Becoming a Global Currency ****
Looks at the obstacles the SDR has to overcome to become a global currency
**** January 2016 - Bretton Woods Committee webinar on Renminbi and SDR's ****
Dr. Warren Coats talks about his "Real SDR" proposal
**** January 2016 - Dr. Warren Coats - More on his "Real SDR" proposal **** - Deeper Look article
(link to Dr. Coats latest updated version of his proposal)Dr. Coats goes into more detail on how his "Real SDR" could become a true global currency
(followup interview with Dr. Coats on his proposal)
(followup interview with Dr. Coats on his proposal)
(this is one of the most significant articles on the blog given the source of information)
****January 2016 - Dr. Coats and Dongsheng Di call on AIIB to issue SDR Bonds****
**** February 2016 - IMF SDR - An Emerging Global Currency? - Video discussion
In depth discussion with current IMF official Dr. Thomas Krueger and former IMF official Dr. Warren Coats (with direct quote from Dr. Coats) - followup article #1 - followup #2
April 2016 - How to Finance Global Reflation (Using the SDR) - this article includes comments from former IMF Head of the SDR Division - Dr. Warren Coats
May 2016 - Claudio Borio (BIS) Comments on SDRs - this article includes a quote from former IMF official Dr. Warren Coats on the remarks by Mr. Borio
June 2016 - A Gold Backed SDR? - Blog article looks at this question and includes comments about it by Jim Rickards and Warren Coats
July 2016 - BIS Banking Head Peter Zollner - speech looks at inclusion of the Renminbi into the SDR basket and also has some other interesting information about the SDR.
July 2016 - IMF Proposal to expand the role of the SDR - this article includes an explanation by Dr. Warren Coats of the difference between IMF reserve SDRs and private SDRs. Also has a link to new IMF video that explains the SDR.
August 2016 - Robert Pringle on current monetary policies - this article is not about SDRs but has important information from a top central bank expert on problems that could lead to broader adoption of the SDR in the event of another major financial crisis. It includes a significant direct quote Mr. Pringle gave me to use for this article.
August 2016 - Willem Middelkoop - IMF's Substitution Fund to Kick-Start SDR as a Global Currency? -- in this article Willem documents past efforts to move towards the SDR as a global currency and also studies on adding a gold component to the SDR basket.
August 2016 - Three part series on SDR Basics - Article #1, Article #2, Article #3 - Article #2 includes a quote from Jim Rickards and Article #3 includes comments from Dr. Warren Coats.
October 2016 - Warren Coats Interview on SDR's, Gold, China
February 2017 - Article with history of the IMF & SDR - sent to me by a blog reader
April 2017 - Warren Coats presentation at the Kemp Foundation on the Real SDR
May 2017 - The Real SDR Proposal - A Deeper Dive
June 2017 - Robert Pringle explains his Ikon reserve currency idea - not the SDR but would be a version of a new global reserve currency anchored to global equities that could be administered at the IMF
June 2017 - Experts and and The Gold Standrd - Dr. Lawrence White - this article allows readers to compare and contrast the classical gold standard with the Real SDR proposal of Dr. Warren Coats and the Ikon proposal of Robert Pringle.
July 2017 - Robert Pringle & Allan Meltzer debate monetary system reform Part I Part II - a series of unedited email exchanges between Robert Pringle and Allan Meltzer
July 2017 - The True Gold Standard by Lewis Lehrman - his book lays out a proposal on how to return to a gold standard. Article includes comments by John D. Mueller
August 2017 - Alternative Media View of the SDR - this video appears describing a new currency token (ACC - Asset Collection Coin) as being tied to a new digital form of the SDR that the IMF would propose as a replacement for the US dollar. It's an interesting idea, but I cannot find any connection between this new token and the IMF. An expert I talk to on these kinds of issues does not believe this would be any kind of SDR from the IMF, but rather what he calls an example of a private SDR like the SDR bonds China has issued. At this point, this appears to just be a private venture token (based in China) that is using the SDR instead of the US dollar or the Yuan as the unit of account. An account holder of these tokens would see them valued in SDR's instead of dollars for example, but would not actually own official SDR's. This does however show how it is possible to some day create a digital version of the SDR which is something we have talked about as being possible in the future. The best information I have right now is that nothing like that is on the near term horizon. I would expect to see some national central banks issue a central bank digital currency long before any kind of digital SDR might be looked at based on information I get from experts I talk to on this. I am keeping an eye on Singapore.
Start date for this page - (Summer 2015), I don't know of anything that would suggest the SDR is about to become a global reserve currency any time soon. However, over time, I do think it becomes more likely that this will be possible. It may even be possible some day for a digital version of the SDR that everyone could use in daily life to emerge. Time will tell.
Added Update July 2016: There is still no indication that the SDR would become a US dollar replacement as global reserve currency any time soon, but over time there are more articles that talk about the idea that show up. The comments by Dr. Warren Coats in the most recent articles linked above are some of the best information available on this topic available in my view given Dr. Coats history as Head of the SDR Division of the IMF. His Real SDR proposal should be read by anyone interested in this topic.
In August 2016 we got the news that the World Bank will issue 2 Billion in SDR denominated bonds (these are the private version of the SDR now called M-SDRs by IMF). This is one of the key first steps towards broader use of the SDR we have noted here.
With the election of Donald Trump, there is has not been much news on this front in late 2016 and early 2017. We noted here that in a February 2017 Bloomberg article IMF Director Christine Lagarde appears to dismiss the idea of anything replacing the US dollar during her term at the IMF.
As of August 2017 there has not been much further news from IMF on an expanded role for the SDR. There was a discussion on this at the April 2017 IMF spring meetings, but no new information was made available about any expanded role for the SDR.