On the distribution of new international reserves

Abstract

THE PLAN to create "Special Drawing Rights" (SDR's) involves a major change in the international monetary system. The systematic creation of reserve assets without a cost in real resources is unique in the history of international financial arrangements. The decision to base the allocation of SDR's among the participating countries on IMF quotas was basically one of ex- . pediency in facilitating the acceptance and ratification of the scheme. Once the decision was made to extend participation to the developing countries (UDC's) rather than to confine it to a select group of advanced countries, the only readily available formula was the IMF quota system. And the fact that a relatively small share of new SDR's would go to UDC's may well have been the price for acceptance by the developed countries.