Which of the following is NOT a characteristic attribute of the Special Drawing Right?
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Answer: B. It can be owned by states or companies, but not by individuals
Explanation
Special Drawing Rights are held exclusively by member states and approved official institutions. Private individuals and commercial companies are legally prohibited from owning or holding SDR assets. The asset functions purely as a reserve supplement for central banks and international organizations. The International Monetary Fund created the reserve asset to supplement official foreign reserves. Its value is calculated daily using a weighted basket of major global reserve currencies. SDRs facilitate international liquidity but do not circulate as physical consumer cash.
Central banks utilize these reserve assets to stabilize national currencies during financial crises. Understanding monetary instruments is essential for analyzing global financial governance structures. The IMF periodically adjusts the currency composition of the basket to reflect trade realities. Option A is a correct attribute describing the multi-currency valuation basket of the asset. Option C accurately describes its role as a synthetic international reserve currency. Option D correctly notes that only the IMF possesses the authority to create new allocations.
- Subject
- Political Science
- Category
- International Relations
- Topic
- —
- Difficulty
- medium
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