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Why SDRs Belong to States, Not Central Banks
As they noted, SDRs represent an international reserve asset that was created by the 🤬IMF in 1969 to help facilitate balance of payment settlements. Even so, SDRs themselves do not constitute debt or loans, but potential claims on the freely usable hard currencies of other 🤬IMF members. Historically, these claims have been used on occasions to pay back 🤬IMF loan programs. This implies the assets are, and always have been, closely connected to fiscal budgets.
Banxico, recently published a statement asserting that it, rather than the government, should maintain control over the $12 billion worth of SDRs the state has received in the latest 🤬IMF issuance. Mexico's president, Andrés Manuel López Obrador, disagrees. He believes the SDRs should go to the government's budget.

It is López Obrador who is right. And it is important for the international community to understand why, on a legal basis.

According to Articles XV and XVII of the 🤬IMF Articles of Agreement, the SDRs belong to "members." Members are the nations' governments, not their central banks.

by Cat on Tue Sep 14th, 2021 at 04:46:26 PM EST
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