Feature of the Month: Special Drawing Right - International Reserve Asset
The Special Drawing Right (SDR) was created in 1969 by the International Monetary Fund (IMF) as a result of the problems surrounding the use of the Bretton Woods system, which pegged currencies to gold. In the very beginning the SDR was pegged to the dollar, but the IMF quickly decided that a basket of currencies would provide much better stability. The basket has become a symbol for the most important currencies in world trade and finance, which is why countries strive to have their currencies be included in the basket.
The SDR basket gives member countries some flexibility to settle international financial obligations, allowing countries to receive loans and make payments when they otherwise might not have been able to. SDR allocations can also be very beneficial to developing countries, as they have a harder time building up reserves of international currencies compared to highly industrialized nations. SDRs allow these developing and low-income countries to build up their reserves and liquidity levels without the heavy cost of borrowing currencies in the world capital markets.
A major development emerged from the IMF the past month, as China’s yuan was added to the SDR basket as an official reserve currency. Check out the globalEDGE blog to read more!
Featured Resources
International Monetary Fund (IMF)
The International Monetary Fund (IMF) is an international organization established to promote global growth and economic stability. The IMF website provides a broad range of useful tools including international finance research publications, a weekly news section, and a free international financial database.
Categories: Financial Services, Industries, Finance
XE: Currency and Foreign Exchange
XE is a comprehensive currency website that provides various foreign currency exchange tools and services. Some of these tools include a currency update email service, a travel expenses calculator, currency charts, and historical rate tables. A universal currency converter is also available and allows easy conversion of one currency rate to another.
Categories: Currency, Standards and Conversions
Featured Academy
International Monetary Systems
The International Monetary Systems module provides one with information concerning: the history of the International Monetary System; the importance of the International Monetary Fund and World Bank, including their basic purposes and functions; what money markets and international money markets are; what international capital markets are and their function in both developing and high-income countries; international security markets; and the basics of the European Monetary System. A case study on Argentina’s recent economic crisis is available.
Doing Business in China
The China module should provide one with a general understanding of the following: China’s market potential and hot industries; its culture and people; common situations that arise when conducting business in China; current obstacles and opportunities in logistics; the historical and current problems faced by the economy; and economic and political factors that affect the costs of doing business in China. A case study focusing on China’s rural dilemma is incorporated into this module.
globalEDGE Business Beat
Michael Beard
Tomas Hult speaks with Michael Beard, Executive Director and Global Health Director at the United Nations Foundation Advocacy. The United Nations Foundation links the UN’s work with others around the world, mobilizing the energy and expertise of business and non-governmental organizations to help the UN tackle issues including climate change, global health, peace and security, women's empowerment, poverty eradication, energy access, and U.S. - UN relations.
This segment is on the 2030 Agenda for Sustainable Development and its 17 goals targeted to end poverty, promote prosperity, and address climate change.
Kostas Bozos
Tomas Hult speaks with Kostas Bozos, Associate Professor in the Leeds University Business School, United Kingdom. They discuss the business climate in Greece, what companies should think about when exporting to Greece, and the outlook of Greece’s economy. As a country in the European Union with long-standing financial troubles, Greece presents both a market opportunity and a cautious investment avenue for companies.
