China’s top official at the International Monetary Fund said the United States was currently cautious about a new allocation of Special Drawing Rights, the IMF’s own currency, but he hoped a consensus for new allocation could be reached in the future.
Zhongxia Jin, China’s executive director at the IMF, told an online event he hoped Washington’s opposition to a new SDR allocation would be overcome as many low-income countries’ liquidity problems turned into insolvency issues.
Jin, who spoke at an event hosted by Boston University’s Global Development Policy Center, did not specifically refer to the U.S. presidential election, which experts say could shift the American stance on new SDRs, focusing instead on the worsening situation facing some countries as a result of the global COVID-19 pandemic.
Jin said a large, new issuance of SDRs was “a very good idea” that was supported by many member countries.
“It is … also very appropriate for the Fund to issue SDRs in a large amount to deal with the liquidity shortage, and in also in many countries, especially low-income countries, the insolvency issue,” he said. “I hope in some stage this consensus can be reached in the board of directors at the Fund.”
IMF chief Kristalina Georgieva first proposed a general allocation of new SDRs, a move that could boost members’ currency reserves by hundreds of billions of dollars, at the start of the pandemic, but Washington has blocked the move.
The IMF last did this during the 2009 financial crisis when President-elect Joe Biden, a Democrat, was vice president, and some member countries hope he will be more open to doing so again this time.