I ruled out a role for Special Drawing Rights (SDRs), the accounting unit issued by the International Monetary Fund.

The US ought not to shy away from wider use of IMF Special Drawing Rights.

The establishment of SDRs was accompanied by a commitment, included in the IMF Articles of Agreement, to making the special drawing right the principal reserve asset in the international monetary system (Article VIII, Section 7 and Article XXII).

One way to make the SDR the major reserve currency relatively soon would be to create and allocate a massive amount of new SDRs to the IMF s members.

Back in 1980, the IMF came close to adopting a so called SDR Substitution Account.

Recognition of this fundamental problem was the reason why the IMF s Special Drawing Rights (SDRs) were created in the 1960 s.

The US ought not to shy away from wider use of IMF Special Drawing Rights. Because SDRs are denominated in several national currencies, no single currency would enjoy an unfair advantage.

Doing so would build on the enlightened suggestion made at the G 20 s London meeting in April 2009 to issue SDRs equivalent to 250 billion, which was then quickly implemented.

In the case of the IMF, the financing for such liquidity could be counter cyclical issues of SDRs.

The idea was that by issuing SDRs, the IMF would provide catch up economies seeking to accumulate reserves with an alternative to piling up dollars.

If the international community is serious about the SDR as an international currency, it will have to empower the IMF to do likewise.

The IMF Articles of Agreement should be amended to allow more flexible use of SDRs, replicating the way central banks operate. That is, SDRs could be created during global recessions and withdrawn during booms.

The first is the need for a truly global reserve currency, perhaps based on the IMF Special Drawing Rights (SDRs).

But skeptics question whether the SDR could ever replace the dollar as the world s leading reserve currency, for the simple reason that the SDR is not a currency. It is a composite accounting unit in which the IMF issues credits to its members.

But the consensus in Beijing was that the G 20 should adopt a modest proposal this year a limited expansion of the International Monetary Fund s current system of Special Drawing Rights (SDRs).

Furthermore, China should be allowed to convert part of its foreign exchange reserves into assets denominated in the International Monetary Fund s special drawing rights (SDRs).

Following the creation of SDRs in 1969, IMF members committed to make them the principle reserve asset in the international monetary system, as stated in the Articles of Agreement. But the peculiar way in which SDRs were adopted limited their usefulness.

And the G 20 unexpectedly agreed to triple the IMF s resources and bring its reserve currency, special drawing rights (SDRs), back from the dead.

While there are currently other priorities, it would be useful for the IMF to study anew an SDR substitution account and similar schemes.

Back then, international monetary diplomacy focused on creating a new form of international reserves, what became the International Monetary Fund s Special Drawing Rights.

For the SDR to become a true international currency, in other words, the IMF would have to become more like a global central bank and international lender of last resort.

A substitution account, housed at the IMF, would enable countries to convert their existing reserve holdings into SDRs.

It will be called the School in the Cloud.

Crashing the SDR

Commercialize the SDR

The IMF s management would also have to be empowered to decide on SDR issuance, just as the Fed can decide to offer currency swaps.

China, Brazil, and Russia have offered ambitious proposals, which may bear fruit in 10 or 20 years, to make the International Monetary Fund s Special Drawing Rights a true international currency.

The Special Drawing Right, the IMF issued reserve currency based on a basket comprising the dollar, euro, yen, and pound sterling, may play a useful role here.

A Special Moment for Special Drawing Rights

Our plane was flying above the clouds.

This should be understood as the first step toward integrating general resource and SDR accounts into a single IMF account, and to increase the SDR s role in IMF transactions so that it eventually becomes the main or even only mechanism for IMF financing.

In addition to the one time increase in the IMF s resources, there ought to be substantial annual SDR issues, say, 250 billion, as long as the global recession lasts.

The other fashionable policy idea that will ultimately prove impractical is to transform the IMF credits known as Special Drawing Rights into an international currency to rival the dollar.

SANTA BARBARA The Chinese government s campaign to have its currency, the renminbi, included in the International Monetary Fund s reserve asset appears to be on the brink of success. Last week, IMF staff formally recommended adding the renminbi to the basket of currencies that determines the value of its so called Special Drawing Rights (SDRs).

I propose that the developed countries in addition to establishing a fast start fund of 10 billion a year band together and lend 100 billion dollars worth of these SDRs for 25 years to a special green fund serving the developing world.

Let me recall that in 1997 the issuance of special drawing rights was approved, supported by 133 countries representing 77.3 per cent of the voting power of the International Monetary Fund countries (IMF).

Parties shall not include the quantities of any Kyoto Protocol units in the registry's mandatory cancellation accounts as defined in the data exchange standards Retirement account' (paragraph 21 (f)).

At the moment, countries holding 85 of IMF voting power must agree before SDRs can be issued, which is no recipe for liquidity.

In 1802 1803, Luke Howard wrote On the Modification of Clouds in which he assigns cloud types Latin names.

Which the skies pour down and which drop on man abundantly.

Can you lift up your voice to the clouds, That abundance of waters may cover you?

Which the clouds do drop and distil upon man abundantly.

Canst thou lift up thy voice to the clouds, that abundance of waters may cover thee?

The piston descends from the top of the cylinder to the bottom of the cylinder, increasing the volume of the cylinder.

The need for such build up would lessen if the IMF develops into an insurance type of institution that has SDR credit lines readily available.