The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. To date, a total of SDR 660.7 billion (equivalent to about US$943 billion) have been allocated. This includes the largest-ever allocation of about SDR 456 billion approved on August 2, 2021 (effective on August 23, 2021). This most recent allocation was to address the long-term global need for reserves, and help countries cope with the impact of the COVID-19 pandemic. The value of the SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

Without resolute measures to address this growing divide, COVID?19 will continue to claim lives and destroy jobs, inflicting lasting damage to investment, productivity, and growth in the most vulnerable countries. The pandemic will further disrupt the lives of the most vulnerable, and countries will see a rise in extreme poverty and malnutrition, shattering all hope of attaining the Sustainable Development Goals.

Narrowing the pandemic divide thus requires collective action to boost access to vaccines, secure critical financing, and accelerate the transition to a greener, digital, and more inclusive world.

Securing finance

As a result of the pandemic, debt and deficits have dramatically increased from already historically high levels. Average overall fiscal deficits as a share of GDP in 2021 have reached 9.9 percent for advanced economies, 7.1 percent for emerging market economies, and 5.2 percent for low-income developing countries. Global government debt...

Without resolute measures to address this growing divide, COVID?19 will continue to claim lives and destroy jobs, inflicting lasting damage to investment, productivity, and growth in the most vulnerable countries. The pandemic will further disrupt the lives of the most vulnerable, and countries will see a rise in extreme poverty and malnutrition, shattering all hope of attaining the Sustainable Development Goals.

Narrowing the pandemic divide thus requires collective action to boost access to vaccines, secure critical financing, and accelerate the transition to a greener, digital, and more inclusive world.

Securing finance

As a result of the pandemic, debt and deficits have dramatically increased from already historically high levels. Average overall fiscal deficits as a share of GDP in 2021 have reached 9.9 percent for advanced economies, 7.1 percent for emerging market economies, and 5.2 percent for low-income developing countries. Global government debt...

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A currency union encompassing all of West Africa promises benefits but faces a multitude of obstacles

During the COVID-19 pandemic advanced economies have tapped their central banks for extensive liquidity support to their economies and to stave off an even deeper global economic crisis. African countries called for a $100 billion stimulus to respond to the pandemic but lacked the tools to finance such an injection of capital. Would strong regional central banks or even a continental central bank have helped? The regional experience of the Economic Community of West African States (ECOWAS) gives a glimpse of what is needed to accomplish monetary integration. But it also highlights the limits of such an approach, the difficulties the continent faces, and some fundamental issues that must be resolved to promote resilience in the region and foster alternative avenues to regional integration.

The leaders of the 15 ECOWAS member...

By IMFBlog

Women remain underrepresented in economics, yet many have made an outsized impact on the field. Whether it’s in working to eliminate poverty, reinventing development economics, examining social safety nets, or improving democratic institutions, Finance & Development magazine has regularly highlighted the contributions made by women economists.

In F&D’s People in Economics series, the work of women economists has featured prominently. To add to your summer reading list, below are some of the profiles from recent years of the important thinkers who are leaving a mark.

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All metrics are not equal when it comes to assessing the pandemic’s unequal effect

The severe impact of the COVID-19 pandemic is clearly seen in the numbers: more than 3.1 million deaths and rising, 120 million people pushed into extreme poverty, and a massive global recession. As suffering and poverty have risen, some data show an increase in another extreme: the wealth of billionaires.

With both extreme poverty and billionaire wealth on the rise, the pandemic’s effect on inequality may appear obvious. The reality is not as simple as you may think.

Inequality is a notoriously challenging concept on which to make definitive statements. Inequality of what? Of household income or of GDP per capita? Or even of mortality rates themselves, across different groups? Inequality among whom: should it be viewed at the level of individuals? Households? Countries? Even once a distribution is precisely specified—so that we are clear...

Overall current account deficits and surpluses widened in 2020 to 3.2 percent of world GDP. The IMF’s multilateral approach suggests that global excessive imbalances were broadly unchanged in 2020 at about 1.2 percent of world GDP. The external outlook for 2021 is highly uncertain given the divergent economic prospects across countries.

Unprecedented government borrowing to finance health care and economic support has had uneven effects on current account balances. The impact on the current account balances depends on a country’s relative fiscal policy stance compared with that of its trading partners.

The outlook for global current account balances is a gradual narrowing during 2022–26, mainly reflecting a narrowing of the US deficit and China’s surplus to below pre-pandemic levels. Over the medium term, collective action is needed to reduce global imbalances in a growth-friendly manner.

Overall current account deficits and surpluses widened in 2020 to 3.2 percent of world GDP. The IMF’s multilateral approach suggests that global excessive imbalances were broadly unchanged in 2020 at about 1.2 percent of world GDP. The external outlook for 2021 is highly uncertain given the divergent economic prospects across countries.

Unprecedented government borrowing to finance health care and economic support has had uneven effects on current account balances. The impact on the current account balances depends on a country’s relative fiscal policy stance compared with that of its trading partners.

The outlook for global current account balances is a gradual narrowing during 2022–26, mainly reflecting a narrowing of the US deficit and China’s surplus to below pre-pandemic levels. Over the medium term, collective action is needed to reduce global imbalances in a growth-friendly manner.

Alejandro Díaz de León is the Governor of Banco de México. He was appointed by the President of Mexico on December 1, 2017 to serve until December 31, 2021. An economist, he began his career at Banco de México in 1991, where he held various positions, including as Macroeconomic Analysis director, and Economic Studies director. In October 2007, he became the general director of the National Pension Fund of State Workers. From January 2011 to November 2015, he was the head of the Debt Management Office at Mexico’s Ministry of Finance, where he was in charge of the government’s internal and external financing and the oil hedging strategy. He also served as director of Mexico’s Export-Import Bank (BANCOMEXT). Prior to becoming Governor, on January 1, 2017, Mr. Díaz de León became part of Banco de México’s governing board as Deputy Governor, having been nominated by Mexico’s President and confirmed by the Senate.###

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Growth prospects for advanced economies this year have improved by 0.5 percentage point, but this is offset exactly by a downward revision for emerging market and developing economies driven by a significant downgrade for emerging Asia. For 2022, we project global growth of 4.9 percent, up from our previous forecast of 4.4 percent. But again, underlying this is a sizeable upgrade for advanced economies, and a more modest one for emerging market and developing economies.

We estimate the pandemic has reduced per capita incomes in advanced economies by 2.8 percent a year, relative to pre-pandemic trends over 2020-2022, compared with an annual per capita loss of 6.3 percent a year for emerging market and developing economies (excluding China).

These revisions reflect to an important extent differences in pandemic developments as the delta variant takes over. Close to 40 percent of the population in advanced economies has been fully vaccinated, compared with 11...

Overall current account deficits and surpluses widened in 2020 to 3.2 percent of world GDP. The IMF’s multilateral approach suggests that global excessive imbalances were broadly unchanged in 2020 at about 1.2 percent of world GDP. The external outlook for 2021 is highly uncertain given the divergent economic prospects across countries.

Unprecedented government borrowing to finance health care and economic support has had uneven effects on current account balances. The impact on the current account balances depends on a country’s relative fiscal policy stance compared with that of its trading partners.

The outlook for global current account balances is a gradual narrowing during 2022–26, mainly reflecting a narrowing of the US deficit and China’s surplus to below pre-pandemic levels. Over the medium term, collective action is needed to reduce global imbalances in a growth-friendly manner.

By IMFBlog

Women remain underrepresented in economics, yet many have made an outsized impact on the field. Whether it’s in working to eliminate poverty, reinventing development economics, examining social safety nets, or improving democratic institutions, Finance & Development magazine has regularly highlighted the contributions made by women economists.

In F&D’s People in Economics series, the work of women economists has featured prominently. To add to your summer reading list, below are some of the profiles from recent years of the important thinkers who are leaving a mark.

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Alejandro Díaz de León is the Governor of Banco de México. He was appointed by the President of Mexico on December 1, 2017 to serve until December 31, 2021. An economist, he began his career at Banco de México in 1991, where he held various positions, including as Macroeconomic Analysis director, and Economic Studies director. In October 2007, he became the general director of the National Pension Fund of State Workers. From January 2011 to November 2015, he was the head of the Debt Management Office at Mexico’s Ministry of Finance, where he was in charge of the government’s internal and external financing and the oil hedging strategy. He also served as director of Mexico’s Export-Import Bank (BANCOMEXT). Prior to becoming Governor, on January 1, 2017, Mr. Díaz de León became part of Banco de México’s governing board as Deputy Governor, having been nominated by Mexico’s President and confirmed by the Senate.###

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Inclusion doesn't just happen; it takes policies that intentionally serve the very specific purpose of ensuring inclusion. That is the focus of Rohini Pande's work these days as the Director of Yale's Economic Growth Center. Pande is one of the most influential development economists of her generation, always looking for ways for the poor to increase their influence and claim their fair share of growth. In this podcast, Pande speaks with journalist Rhoda Metcalfe about how tackling poverty depends less on direct aid and more on creating effective democratic institutions so that vulnerable populations can push their representatives to implement redistributive policies. Transcript: https://bit.ly/37lughM Read Rohini Pande's profile at IMF.org/fandd

Exceptional policy support prevented a global economic depression, even as the pandemic took a heavy toll on lives and livelihoods. The global reaction, as seen in major shifts in travel, consumption, and trade, also made the world a more economically imbalanced place as reflected in current account balances—a record of a country’s transactions with the rest of the world.

In our latest External Sector Report we found that the global reaction to the pandemic further widened global current account balances—the sum of absolute deficits and surpluses among all countries—from 2.8 percent of world GDP in 2019 to 3.2 percent of GDP in 2020. Those balances are set to widen further as the pandemic continues to rage in much of the world.

If not for the crisis, global current account balances would have continued to decline. While external deficits and surpluses are not necessarily a cause for concern, excessive imbalances—larger than warranted by the economy’s...

By Tobias Adrian and Rhoda Weeks-Brown

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New digital forms of money have the potential to provide cheaper and faster payments, enhance financial inclusion, improve resilience and competition among payment providers, and facilitate cross-border transfers.

But doing so is not straightforward. It requires significant investment as well as difficult policy choices, such as clarifying the role of the public and private sectors in providing and regulating digital forms of money.

Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits.

Cryptoassets are privately issued tokens based on cryptographic techniques and denominated in their own unit of account. Their value can be extremely volatile....