HONG KONG- China’s top central banker has urged the International Monetary Fund (IMF) to issue hundreds of billions of dollars of liquidity to its 189 member countries through a general allocation of Special Drawing Rights (SDRs) despite US objections.
Yi Gang, governor of the People’s Bank of China, wrote in an opinion piece in the Financial Times that an issuance of SDRs – the IMF’s internal monetary unit – is needed to help countries to contend with the COVID-19 pandemic.
“A general allocation of SDRs, which are sometimes called ‘liquid gold’ and can be created with the stroke of a pen, is the missing piece in (the) IMF’s crisis response,” Yi wrote.
The move, akin to a central bank printing new money, was last deployed in 2009, when the IMF issued $250 billion of SDRs to its members to ease the global financial crisis.
While such a move has the backing of prominent economists, many finance ministers and some former government leaders, its biggest opponent – the US Treasury – holds veto power over major decisions at the IMF.
Treasury Secretary Steven Mnuchin has opposed SDR issuance because it would provide all countries with added liquidity, arguing that most of the money would go to wealthier G20 countries that do not need it. – Reuters
