The international monetary system and the special drawing right / W.M. Corden.

Abstract

This paper deals with the question: is there an important role in the international monetary system for an internationally-created reserve asset such as the Special Drawing Right (SDR)? The greater part of the paper has been devoted to an analysis of the current international monetary "non system", to a detailed discussion of possible problems or limitations of this system and of the extent to which SDRs could deal with these problems. It is then speculated whether a new fixed rate system with centrally controlled reserved might be established. The implications of such a system are considered. Finally, the paper proceeds to a review of the evolution of thinking about the SDR and how this has been related to actual events. At first there was a concern about inadequate reserves, then about excessive reserves. The special role of the dollar then became the subject of special attention followed by the multicurrency system. Perhaps we have now moved into a fifth stage where the concern is not about inadequate reserves for the world as a whole but specifically for developing countries. Show more