IMF, SDRs and more sabre rattling
The talk about the need for an alternative to the USD continues – or it doesn’t, depending on which Chinese official you speak to on the day. But as Commerz points out this week, the IMF’s decision to issue up to $500 billion of SDR bonds was a surprise. The expectation had been for issuance of $150 billion. The bank adds that so far, only China, Russia and Brazil have shown any interest in funding the IMF this way and that the SDR – a basket made up of USD, EUR, JPY and GBP – “will hardly vie with the dollar for dominance as the world’s major reserve currency. Especially since the recent statistics on central bank reserves show that in the first quarter the dollar’s share of reserves grew further (from 64.1% to 65%). So, in the crisis, the dollar is the safe haven for central banks, too.”
Elsewhere, Reuters has reported that China has asked the G8 to debate a new global reserve currency when it meets next week in Italy.