This is a list of the most popular articles we have written here related to the SDR used at the IMF and possible future scenarios for its use as a global reserve currency. This will make it easier for new visitors to find these articles which have generated a lot of interest from readers here. These are among the most popular articles (based on reader visits) here on the blog.
Over time on this page, we have added a variety of creative proposals and ideas for monetary system reform to create a "marketplace of ideas" for readers to peruse at their convenience. Included below are articles featuring a diverse group of experts who come from a variety of points of view like Jim Rickards, Dr. Lawrence White, Dr. Warren Coats, Robert Pringle, Dr. Judy Shelton, Willem Middelkoop, John D. Mueller, Keith Weiner and others. Many of these articles contain direct quotes I received from these experts offered for readers here.
I don't think anything else like this exists online as far as I know. There is a wealth of information available below for anyone interested in the topic of potential monetary system reforms. I think everyone should be interested since major monetary system reform would impact everyone one way or another.
Jim Rickards has predicted that when the next major global financial crisis comes, the only "clean balance sheet" left in the world to deal with the crisis will be at the IMF. He has predicted that the SDR will be promoted as a replacement global reserve currency to the US dollar . Here is a quote from Jim in the WSJ article linked just above:
"Jim Rickards, an author and former general counsel for failed hedge fund Long-Term Capital Management, thinks SDRs will be issued to reflate the system in the next crisis, hurting the dollar’s reserve status. “It’s all converging on a world where the dollar will just be a local currency like the Mexican peso,” he says."
If you do some research on the SDR, you learn pretty quickly that while it is a somewhat obscure unit of value only used at the IMF and central banks right now, it has always had the potential to become something beyond that. If Jim Rickards forecast pans out, we will see the SDR become more prominent for sure.
Even if we do not get another major crisis, I do believe that it is possible that in the future we could the see SDR become some kind of global reserve currency. It might come in stages over time in a step by step process rather than suddenly as in a crisis. It might follow after regional areas adopt regional currencies (the African Union - AU as an example patterned after the Euro). It might even eventually be a digital version that people outside the IMF/Central bank system could use.
It's also possible that the public might reject the SDR if we get another crisis and people lose confidence in the present global financial institutions. Time will tell. As you can see below, there are a variety of other proposals for people to consider including a variety of ideas on how to bring gold back into the system in a modernized form.
If the SDR is some day used for this purpose, the more we know about it the better. It does not matter if you think it would be a great idea or if you hate the idea. There is still value in having an understanding of what the SDR is now and how it could be used in the future. With that in mind, here are links to the most popular articles we have written on this topic. The research for the articles on SDR's comes both from available publications and some good direct sources with expert knowledge on SDR's.
Articles on other alternative proposals begin to appear as you scroll down the page. I added these as I encountered them over the years researching these issues.
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February 2014 - What is an SDR? and August 2015 - Primer on SDR's
Some basic info about the SDR
June 2014 Update on KlickEx - An Asset Backed Virtual Currency?
This article is a little dated now, but still has some important information in it
July 2014 - Jim Rickards in depth on the IMF and the SDR
Jim Rickards explains his forecast in detail in this interview
December 2014 - IMF Reforms and SDR's - Why Should Anyone Care about them?
Some basic info and why people should care about it
May 2015 - Dan Popescu on the SDR, Gold, and China
Thought provoking article from Dan Popescu
June 2015 - OMFIF - Chinese SDR Inclusion Could Trigger Global Assets Shift
A reader here sent me the link to this article
****June 2015 - Dr. Warren Coats (former IMF) - A Global Currency for a Global Economy ****
Examines Dr. Coats Proposal for a "Real SDR"
**** July 2015 - Converting the SDR into Something People Can Use ****
Talks about how the SDR might some day be used outside the IMF
**** August 2015 - Roadblocks to the SDR Becoming a Global Currency ****
Looks at the obstacles the SDR has to overcome to become a global currency
**** January 2016 - Bretton Woods Committee webinar on Renminbi and SDR's ****
Dr. Warren Coats talks about his "Real SDR" proposal
**** January 2016 - Dr. Warren Coats - More on his "Real SDR" proposal **** - Deeper Look article
(link to Dr. Coats latest updated version of his proposal)
(followup interview with Dr. Coats on his proposal)
Dr. Coats goes into more detail on how his "Real SDR" could become a true global currency(followup interview with Dr. Coats on his proposal)
(this is one of the most significant articles on the blog given the source of information)
****January 2016 - Dr. Coats and Dongsheng Di call on AIIB to issue SDR Bonds****
**** February 2016 - IMF SDR - An Emerging Global Currency? - Video discussion
In depth discussion with current IMF official Dr. Thomas Krueger and former IMF official Dr. Warren Coats (with direct quote from Dr. Coats) - followup article #1 - followup #2
April 2016 - How to Finance Global Reflation (Using the SDR) - this article includes comments from former IMF Head of the SDR Division - Dr. Warren Coats
May 2016 - Claudio Borio (BIS) Comments on SDRs - this article includes a quote from former IMF official Dr. Warren Coats on the remarks by Mr. Borio
June 2016 - A Gold Backed SDR? - Blog article looks at this question and includes comments about it by Jim Rickards and Warren Coats
July 2016 - BIS Banking Head Peter Zollner - speech looks at inclusion of the Renminbi into the SDR basket and also has some other interesting information about the SDR.
July 2016 - IMF Proposal to expand the role of the SDR - this article includes an explanation by Dr. Warren Coats of the difference between IMF reserve SDRs and private SDRs. Also has a link to new IMF video that explains the SDR.
August 2016 - Robert Pringle on current monetary policies - this article is not about SDRs but has important information from a top central bank expert on problems that could lead to broader adoption of the SDR in the event of another major financial crisis. It includes a significant direct quote Mr. Pringle gave me to use for this article.
August 2016 - Willem Middelkoop - IMF's Substitution Fund to Kick-Start SDR as a Global Currency? -- in this article Willem documents past efforts to move towards the SDR as a global currency and also studies on adding a gold component to the SDR basket.
August 2016 - Three part series on SDR Basics - Article #1, Article #2, Article #3 - Article #2 includes a quote from Jim Rickards and Article #3 includes comments from Dr. Warren Coats.
October 2016 - Warren Coats Interview on SDR's, Gold, China
February 2017 - Article with history of the IMF & SDR - sent to me by a blog reader
April 2017 - Warren Coats presentation at the Kemp Foundation on the Real SDR
April 2017 - Judy Shelton presentation at the Kemp Foundation Forum
May 2017 - The Real SDR Proposal - A Deeper Dive
June 2017 - Robert Pringle explains his Ikon reserve currency idea - not the SDR -- but would be a proposed version of a new global reserve currency anchored to global equities that could be administered at the IMF
June 2017 - Experts and and The Gold Standrd - Dr. Lawrence White - this article allows readers to compare and contrast the classical gold standard with the Real SDR proposal of Dr. Warren Coats and the Ikon proposal of Robert Pringle.
July 2017 - Robert Pringle & Allan Meltzer debate monetary system reform Part I Part II - a series of unedited email exchanges between Robert Pringle and Allan Meltzer
July 2017 - The True Gold Standard by Lewis Lehrman - his book lays out a proposal on how to return to a gold standard. Article includes comments by John D. Mueller
August 2017 - Alternative Media View of the SDR - this video appears describing a new currency token (ACC - Asset Collection Coin) as being tied to a new digital form of the SDR that the IMF would propose as a replacement for the US dollar. It's an interesting idea, but I cannot find any connection between this new token and the IMF. Here is our article with the information we could find on the ACC. Experts I consult with found this news interesting, but did not want to offer any public comment on it.They did agree that they see no evidence of any kind of IMF involvement at this time in terms of the ACC being any kind of SDR even though ACChain marketing materials do refer to a "digital SDR currency" in a vague way. We will simply monitor this over time to see if it becomes anything significant. Here is the followup article on ACC.
October 2017 - Dr. Warren Coats comments on a UN proposal to use SDRs to "finance development"
October 2017 - IMF Director Christine Lagarde Mentions a "Digital Version of the SDR"
November 2017 - Glint Offers a Way to Use Gold as Money - July 2018 update- Glint expands into the US
December 2017 - Is there a Path for Bitcoin to go Mainstream?
March 2018 - Proposal for a Commodity Reserve Currency System
May 2018 - Dr. Judy Shelton calls for a new monetary system "linked in some way to gold". Source paper is here, see page 387.
July 2018 - Jim Rickards says Global Monetary Reset may already be in progress
(note: I got a lot of email feedback on this article from a variety of economists who agree with parts of it and disagree with other parts) . Readers need to keep in mind that for the IMF to issue trillions of new SDR's, they must get IMF member approval (85% vote) and the US holds veto power over any vote on something like that at the IMF.
July 2018 - Dr. Warren Coats (former IMF) Proposal for The Chicago Plan
July 2018 - Keith Weiner Proposes - The Unadulterated Gold Standard
August 2018 - Efforts to make gold money are popping up around the globe
August 2018 - Dr. Judy Shelton offers her ideas on monetary system reform
August 2018 - Robert Bell (KlickEx CEO) on monetary system reform
May 2019 - Dr. Warren Coats Proposes Currency Board Rules for the Fed
June 2019 - Facebook Introduces Project Libra (Facebook vs. Central Banks?)
(Steve Forbes open letter to Mark Zuckerberg about the Libra)
July 2019 - Claudio Borio (BIS) on Money, Central Banks, Debt, and Trust
July 2019 - MIT TradeCoin Currency Proposal (with added note on Kinesis)
October 2019 - Earth Reserve Assurance (ERA) - A Sound Money Framework
Q&A Interview with Joseph Potvin on the ERA - Part I Q&A Interview - Part II
Q&A Interview with Robert Pringle on Central Banks and the Impact of Money on Society (January 2020)
January 2020 - Followup summary on The Power of Money
June 2020 - Ray Dalio on Monetary History and Where We are Now
June 2020 - All About Gold - Educational Documentary on Gold
August 2020 - One Millennial's View of Our Monetary System
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Start date for this page - (2015) - I don't know of anything that would suggest the SDR is about to become a global reserve currency any time soon. However, over time, I do think it becomes more likely that this will idea be considered. It may even be possible some day for a digital version of the SDR that everyone could use in daily life to emerge. Time will tell.
Added Update July 2016: There is still no indication that the SDR would become a US dollar replacement as global reserve currency any time soon, but over time there are more articles that talk about the idea that show up. The comments by Dr. Warren Coats in the articles linked above are some of the best information available on this topic available in my view given Dr. Coats history as Head of the SDR Division of the IMF. His Real SDR proposal should be read by anyone interested in this topic.
In August 2016 we got the news that the World Bank will issue 2 Billion in SDR denominated bonds (these are the private version of the SDR now called M-SDRs by IMF). This is one of the first steps towards possible broader use of the SDR as we have noted here.
With the election of Donald Trump, there is has not been much news on this front in late 2016 and early 2017. We noted here that in a February 2017 Bloomberg article IMF Director Christine Lagarde appears to dismiss the idea of anything replacing the US dollar during her term at the IMF. President Trump has not indicated any desire to substantially reform the monetary system so far.
As of August 2017 there has not been much further news from IMF on an expanded role for the SDR. There was a discussion on this at the April 2017 IMF spring meetings, but no new information was made available about any expanded role for the SDR. In September 2017, IMF Director Christine Lagarde makes a brief reference about the IMF being willing to consider a digitial version of the SDR in the future in a speech in London.
As of July 2018, the IMF has not indicated they are interested in moving forward with an expanded role for the SDR at this time. They continue to study the idea, but do not appear to have interest beyond that for now based on public statements. A variety of efforts to make it easier for people to use gold like money have popped up around the world and we have covered some of those efforts in the articles linked above.
As of Summer 2019 no new emphasis for any major monetary system change has emerged. President Trump indicated he plans to nominate Dr. Judy Shelton to the Federal Reserve Board. Dr. Shelton has called for monetary system reform in many articles and interviews. She has said it would be great if there were a new Bretton Woods style monetary conference held at Mar a Lago to discuss reform. (see her interview with the Financial Times).
As of February 2020, there is still no indication that any kind of major system changes are planned. Instead, the US and the world seem more divided than ever and there appears to be no consensus of any kind for reform. This means the powers that run things pretty much are dedicated to doing whatever they can to keep the present system functioning.
As we have explained here in depth, we would probably have to see another new major financial crisis to prompt any kind of major change proposals to disrupt the status quo. It is important to continue to watch for potentially disruptive events as there are still many systemic risks out there.
March 2020- Some of the experts I hear from do believe the Coronavirus epidemic could be a trigger that sets off events leading to major monetary system change. The consensus was that the process may happen over time rather than suddenly.
June 2020 - Fund Manager Ray Dalio authors a series of articles titled 'The Changing World Order' that says we are nearing the end of a long term cycle and headed for some major changes.
ReplyDeleteSuper article, thanks for sharing useful information…
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