The IMF Allocation of Special Drawing Rights: Opportunities and Legal Constraints

The paper describes the main features of the Special Drawing Rights (SDRs), the international reserve assets issued by the International Monetary Fund (IMF). After the historical allocation of SDRs worth 650 billion USD of August 2021, it has been advocated that the wealthiest economies should ‘redirect’ (or ‘re-channel’) at least part of their new SDRs to the benefit of the most vulnerable countries. This can be achieved in different ways, but all present legal challenges and obstacles, especially for euro area Member States. The paper discusses several scenarios and concludes that the existing legal framework needs to be cleared of the many constraints that risk turning the 2021 SDR allocation into a missed opportunity. Paper written as part of the project, “For a European Union-African Union Plan on the New Allocation of the IMF SDRs”, funded by the Italian Ministry of Foreign Affairs and International Cooperation.