The world is close to agreeing on the creation of up to $650bn in new special drawing rights within the IMF. The initial allocation of these sums would follow the normal principle in international affairs: to those who have it shall be given. But it is possible and desirable to reallocate a sizeable proportion of the benefits of this free money to global purposes, above all by helping fragile low-income countries restore their pandemic-battered prospects. This opportunity must be seized.
The idea of creating a large quantity of new SDRs was mooted early in the pandemic. Predictably, it was vetoed by the Trump administration. Under the Biden administration, this has changed. Since the US has a veto in the IMF, that is crucial. The planned allocation is also huge by historical standards, increasing the value of outstanding SDRs by 120 per cent (see charts).
