Special Drawing Rights (SDRs) - Limited World Resources

Factsheet - Special Drawing Rights (SDRs): "Why was the SDR created and what is it used for today?

The Special Drawing Right (SDR) was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves—government or central bank holdings of gold and widely accepted foreign currencies—that could be used to purchase the domestic currency in world foreign exchange markets, as required to maintain its exchange rate. But the international supply of two key reserve assets— gold and the U.S. dollar—proved inadequate for supporting the expansion of world trade and financial development that was taking place. Therefore, the international community decided to create a new international reserve asset under the auspices of the IMF.

However, only a few years later, the Bretton Woods system collapsed and the major currencies shifted to a floating exchange rate regime. In addition, the growth in international capital markets facilitated borrowing by credit worthy governments. Both of these developments lessened the need for SDRs."

How SDR's can be applied in a World with increasingly limited natural resources
Sustainable Resource Transition of the OECD Economy

In an easily measurable timeframe of no more than 2 or 3 years from now, by 2011 or 2012, OECD decision makers will have to ‘bite the bullet’ and accept, firstly, that Energy Transition is a serious, real-world challenge to the survival of their economies and societies. Cheap Oil has totally disappeared already, and will never return. Other fossil energy resources are in catch-up phases of price growth, spilling over to the whole resource complex. Cheap food and agroresources have gone the same way as cheap energy, and any respite due to a ‘short sharp cut’ in global economic growth is relatively unlikely, and extreme high risk for any apprentice sorceror wanting to bring it on.The multiple implications of this are treated by myself and various contributors to my book ‘The Final Energy Crisis’ (Pluto Books 2005 and 2008, ISBN 0745320929). They range from the economy, transport, food supply and habitat through to cultural values and how society deals with a radically changing future.

Models for change away from fossil fuel burning exist, including the Kyoto Treaty and possible transition programmes based on the IMF framework for Special Drawing Rights, for member countries confronted by short-term financial and budget crisis. The SDRs, as we know, are based on a complex formula including the member country’s size, economic conditions, and previous performance. On a directly comparable base, « Oil Drawing Rights » and « Natural Gas Drawing Rights » could be set and allocated, with oil and later natural gas removed from conventional market trading, and national consumption rates decided by an international secretariat holding all the powers needed to carry out its functions. In brief, the basic need to reduce energy intensity will become, or has become clear and this will entrain the creation of many new enterprises and activities not concerned with supply, but with energy demand.