The largest seven economies in the world (G7) have agreed to the first reserve expansion in over a decade, aiming to help developing countries combat the aftermath of the pandemic. This could be a signal that substantial changes for Special Drawing Rights (SDR) might be made at the World Bank and the International Monetary Fund (IMF) meeting later in the spring.
In terms of the size of the incoming capital, G7 expressed that it would be up to the World Bank and IMF’s assessment on the need of global reserve. G7 also expressed that they are willing to work with the IMF on how countries would voluntarily recycle a portion of their allocation. This gives the possibility of rich countries sharing their aid with poorer countries, which addresses many economists’ concern about how the SDR might only benefit wealthy countries.
G7, also known as Group of Seven, consists of the United States, the United Kingdom, Japan, France, Germany, Italy, and Canada, some of the world’s largest developed countries. The United States is the IMF’s biggest shareholder and has expressed willingness to issue a $500 billion boost to the IMF to help increase support for this initiative.
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