IMF Board to Discuss Possible Expansion of SDR Role.

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Johnny Oxygen
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IMF Board to Discuss Possible Expansion of SDR Role.

Ugh! Keep the derivative ball rolling. Global currency here we come.

The board of the International Monetary Fund will discuss a possible expansion of the role of the Special Drawing Right, IMF Deputy Managing Director John Lipsky said Friday.

“One of the options being discussed is to increase the usage and stock of SDRs, and broaden the terms on which they could be used,” Lipsky said in an interview on the sidelines of the World Economic Forum annual meeting.

...Russian President Dmitry Medvedev told the assembled guests in Davos earlier in the week that the currencies of the four largest emerging economies — Brazil, Russia, India and China — should all be included in the SDR basket, while French President Nicolas Sarkozy, this year’s chairman of the Group of 20 industrial and developing nations, repeated his argument that the Chinese renminbi, at the very least, should be included in the basket, reflecting the increasing weight of China in the world economy and weakening the dominance of the dollar.

...But in a world where many are concerned about the ability of the dollar to retain its value over the long term, countries that currently hold almost all of their reserve in dollars might be attracted to holding more SDRs if it contained the renminbi, which for now enjoys the support of a large current account surplus.

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