MF Special Drawing Rights allocation as a first step towards a new economic order

This paper is meant to be a general, non-exhaustive collection of historical backgrounds and thoughts about the status of the debate on the possible usage of Special Drawing Rights (“SDRs”) as a tool to facilitate the recovery of international trade after the Covid-19 pandemic. The analysis presented ranges from the origins of SDRs, in the late 1960s, when they were thought of as a tool to preserve the stability of the ailing Bretton Woods system for a long period lasting around 30 years, when the IMF made only very limited allocations and there was substantial inactivity on the secondary market for this tool, to the recent developments after the 2009 crisis and, more significantly, to 2021 and the current situation. Some thoughts and possible ideas are also presented on the possible future, and about how SDRs could be reconsidered as a renovated “Bancor”, rather than as a tool helping to foster financial stability. The relationship with the US dollar is also examined, in its role as a core international currency in which most trade is still denominated. We would like to explore some questions about the present and future situation and regarding whether SDRs could be a menace to the role of the US dollar or an opportunity to help the international financial system to stabilize in continuity with the history of recent decades; and, also, from a European perspective, how much SDRs can help or hinder the role of the euro. Although it does not seem that all IMF members speak with one voice on all those topics, apparently there is nevertheless consensus on the significant new role that SDRs will likely assume in the coming years, in the hope of having a tool which may help in generating growth and stability, which is currently the only way to respond effectively to the challenges ahead.