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Yellen supports new allocation of IMF's SDR currency to help poor nations

ForexFeb 25, 2021 11:20AM ET
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© Reuters. FILE PHOTO: Federal Reserve Chairman Janet Yellen speaks during a news conference after a two-day policy meeting, in Washington

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) - U.S. Treasury Secretary Janet Yellen on Thursday threw her support behind a new allocation of the IMF's own currency, or Special Drawing Rights, but said broad parameters were needed to boost transparency on how the reserves are used and traded.

Reversing the opposition of the Trump administration, Yellen told G20 finance officials in a letter that a new SDR allocation could boost liquidity for poor countries, which have been particularly hard hit by the global coronavirus pandemic.

The U.S. Treasury chief gave no specific size for possible allocation of SDRs, which can be converted to hard currency by IMF members. Italy, which holds the presidency of the G20 this year, and other members of the group of rich and emerging economies have backed a $500 billion allocation, but the United States had been guarded about its view until now.

Yellen said an SDR allocation and steps to boost low- and zero-interest lending by the World Bank and International Monetary Fund were needed to help contain the pandemic and mitigate its devastating impact, particularly in poor countries with fewer resources.

"Without further international action to support low-income countries, we risk a dangerous and permanent divergence in the global economy," Yellen said in her letter, which was released a day ahead of her videoconference with other G20 finance officials.

"An allocation of new Special Drawing Rights (SDRs) at the IMF could enhance liquidity for low-income countries to facilitate their much-needed health and economic recovery efforts," she said. "To make this tool effective, the G20 must work with a broad coalition of countries on a set of shared parameters for greater transparency and accountability in how SDRs are exchanged and used."

IMF spokesman Gerry Rice welcomed Yellen's statement as "a very helpful letter on a very important issue." The IMF's previous SDR allocation during the global financial crisis had "served the world very well" and could do so again in the current crisis," he said.

Civil society groups, religious leaders and some Democratic lawmakers in the U.S. Congress have called for a much larger allocation valued at $3 trillion, but sources familiar with the matter said they viewed such a large move as unlikely for now.

The IMF last issued new currency reserves of $250 billion in 2009, as economies around the world battled the global financial crisis.

Yellen supports new allocation of IMF's SDR currency to help poor nations
 

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Comments (5)
American Truth
American Truth Feb 27, 2021 7:01AM ET
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america last, that should have been the leftist slogan during the last stolen election cycle.
Mark Henline
Mark Henline Feb 25, 2021 11:46AM ET
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I'm going to the bank as an IMCindependent monetary customer. and I'm going to ask them to let me make specuak.withdrawls from special funds. , I give them an IOU!
Nino Gasparini
Nino Gasparini Feb 25, 2021 10:38AM ET
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I do not think this is a wise decision to spend American tax dollars this way. We have a need here in the USA for that money. Who will monitor the funds distributed to these mostly corrupt nation's once the funds are allocated? Let's get our own house in order and reduce our deficits and red ink then we can talk about charitable contributions. I'm sympathetic to the plights of developing nation's but we can serve them better if the US government backs the will of the people by fulfilling their needs and the future needs of generations to come. If we continue the path we are on with this current administration we will destroy this nation from with in. We need to be fiscally responsible. Once that money reaches IMF vault it's gone and every year they'll ask for more. What about the tax payers and their needs or the needs of the future generations? The health of this nation is in peril . The old adage that you cannot take care of someone else unless you take care of yourself 1st
Steve Lora
Steve Lora Feb 25, 2021 10:26AM ET
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Granny Yellen is a good girl. Now get back in the kitchen old woman.
Eudon Hickey
Eudon Hickey Feb 25, 2021 10:11AM ET
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I think china already autorized Yellen to mention this.
 
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