India Opposes Allocation of SDR

Recently theFinance Minister of India said that the country could not support a general allocation of new Special Drawing Rights by the International Monetary Fund because it might not be effective in easing coronavirus-driven financial pressures.

Cause of Concern

  • India is concerned that such a major liquidity injection could produce potentially costly side-effects if countries used the funds for “extraneous” purposes.
  • India opposes a new SDR allocation, which would provide all 189 members with new foreign exchange reserves with no conditions.
  • In the current context of illiquidity and flights to cash, the efficacy of an SDR allocation is not certain, additionally most ....
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