Is SDR Creation Inflationary?

Policy Papers, January 7, 2011

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Is SDR Creation Inflationary?

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Bibliographic details

• Published: January 7, 2011
• Series: Policy Papers

Summary

• Publication date: January 7, 2011
• Core question: Whether allocating Special Drawing Rights (SDRs) more frequently and in significant amounts would be inflationary for the world economy.
• Approach: Explores five different “scenarios” describing how recipient countries and the leading central banks—most notably the U.S. Federal Reserve (FRB) and the EU’s European Central Bank (ECB)—would respond to those allocations.
• High-level conclusion: SDR issuance would be inflationary for the world economy under two of the scenarios, but not under the remaining three scenarios, which include the most likely ones.

Scenarios and main findings

• Number of scenarios explored: five
• Central banks explicitly considered: FRB (U.S. Federal Reserve) and ECB (European Central Bank)
• Findings by scenario:
  • Inflationary outcome in: two scenarios
  • Non-inflationary outcome in: three scenarios (these three include the most likely responses)

Themes and topics covered

• Allocation of SDRs
• Foreign exchange reserves
• Inflation
• Monetary policy
• Reserves
• SDRs

Source: Is SDR Creation Inflationary?, International Monetary Fund, January 7, 2011

Content in this bundle

• Is SDR Creation Inflationary?
  • Is SDR Creation Inflationary? (Markdown version)
  • Is SDR Creation Inflationary? (PDF)