- Yellen backs new allocation of IMF’s currency to aid in recovery
by Reuters via https://www.aljazeera.com/ , 25 Feb 2021
The global economy is at risk of a ‘dangerous and permanent divergence’, the secretary of the US Treasury warned G20 officials.
United States Treasury Secretary Janet Yellen on Thursday threw her support behind a new allocation of the International Monetary Fund’s own currency, or Special Drawing Rights (SDR), but said broad parameters were needed to boost transparency on how the reserves are used and traded.
Reversing the opposition of the administration of former US President Donald Trump, Yellen told Group of 20 (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 US 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 $500bn allocation, but the US 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 IMF were needed to help contain the coronavirus pandemic and mitigate its devastating impact, particularly in poor countries with fewer resources.