Understanding Special Drawing Rights (SDRs)
The IMF launched Special Drawing Rights in 1969 as an additional international reserve asset to supplement member countries’ official reserves. Unlike other reserves like foreign exchange reserves or gold reserves, SDRs are not in the nature of a currency as such but a claim on currencies held by IMF member nations. They are derived from a weighted basket of the world’s major currencies—the US dollar, euro, Chinese renminbi, Japanese yen, and British pound sterling—on the basis of the structure of world trade and finance.