Download or read book Does the SDR System Generate Permanent Resource Transfers? written by International Monetary Fund and published by International Monetary Fund. This book was released on 1988-04-14 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper analyzes whether the SDR system generates permanent resource transfers—i.e., transfers of resources that do not involve equivalent quid pro quos. It is argued that SDR allocation only gives rise to permanent resource transfers if the SDR interest rate is uncompetitive or if holding SDRs is perceived to be risky, and that the use of SDRs gives rise to permanent resource transfers only if the SDR interest rate is uncompetitive. These conclusions are reconciled with the fact that SDR allocation can provide reserves to many countries at terms more favorable than the costs of borrowing or earning reserves.