SDR should go digital: central bank researcher
Electronic version of IMF's reserve currency 'could ease flaws' in monetary system
The International Monetary Fund should create a digital version of its global reserve currency that could be more widely used across the world's financial markets and payment systems, a senior central bank researcher said yesterday.
Yao Yudong, head of the People's Bank of China's Research Institute of Finance and Banking, said in the state-backed Shanghai Securities News that the eSDR - the electronic version of the IMF's Special Drawing Rights (SDR) - would help address flaws in the global monetary system.
Additionally, the role of the SDR should be expanded, Yao said, echoing suggestions made by central bank governor Zhou Xiaochuan in 2009.
Yao's proposals include establishing a settlement system between SDR and other currencies, and promoting the use of SDR in global trade, financial transactions, commodities pricing and bookkeeping.
SDRs are backed by a basket of major currencies and commonly used as the unit of denomination for financial arrangements between the IMF and its members, which include development financing and emergency loans to countries with liquidity problems.
Yao says the SDR basket should also include currencies of all major economies, whose GDPs should be taken into account in setting the currencies' weightings.