Q. Consider the following statements regarding “Special Drawing Right (SDR)”:
1.The World Bank created the SDR as a supplementary international reserve asset in 1969.
2.The SDR is not a currency, but its value is based on a basket of five currencies.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: B
Notes:

Explanation: The IMF created the SDR as a supplementary international reserve asset in 1969, when currencies were tied to the price of gold and the US dollar was the leading international reserve asset.

  • The IMF defined the SDR as equivalent to a fractional amount of gold that was equivalent to one US dollar.
  • The SDR is an international reserve asset. The SDR is not a currency, but its value is based on a basket of five currencies—the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Source: https://www.imf.org/en/About/Factsheets/Sheets/2023/special-drawing-rights-sdr

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