Special Drawing Rights (XDR), unlike traditional currencies, are not used for everyday transactions but serve as a reserve asset created by the International Monetary Fund (IMF) to supplement member countries’ official reserves. Uniquely, the value of the XDR is determined by a basket of major international currencies, including the US dollar, euro, Chinese yuan, Japanese yen, and British pound. This makes it a truly global asset, immune to the fluctuations of any single currency.

Introduced in 1969, XDRs were first designed to support the Bretton Woods fixed exchange rate system. While they primarily assist in stabilizing global economies, their use has expanded to various international financial activities, underscoring their significance as a cornerstone in global financial stability.