IMF board approves members to channel reserve assets to MDBs for hybrid instruments

The IMF said the board's decision on May 10, should help broaden the use of SDRs, while increasing the attractiveness of the SDR as a reserve asset. It comes as the IMF and other international financial institutions are under pressure to increase resources available to help developing countries and emerging markets grapple with rising global challenges, such as climate and food security.

The International Monetary Fund on Wednesday announced that its executive board has approved members to use their Special Drawing Rights (SDRs), or IMF reserve assets, to acquire hybrid capital instruments issued by multilateral development banks. The IMF said the board's decision on May 10, should help broaden the use of SDRs, while increasing the attractiveness of the SDR as a reserve asset.

It comes as the IMF and other international financial institutions are under pressure to increase resources available to help developing countries and emerging markets grapple with rising global challenges, such as climate and food security. The IMF's board set a cumulative limit of $20 billion for such use of SDRS to address possible liquidity risks, and said it would review the new usage of SDRs once member contributions surpassed $13.2 billion, or in two years, whichever came first.

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