September 03, 2009

Beijing Converts 50 Billion $ to SDR [CORRECTION]

[CORRECTION: Reuters reports that the People's Bank of China will use Yuan not dollars to buy the IMF SDRs.]
In a move celebrated by the IMF, the Chinese central bank will convert $50 billion into SDRs or Special Drawing Rights bonds. SDRs are based on a basket of convertible currencies and were created by the IMF in the 1970s to convert away from gold. Whether SDRs convert as easily into gold is another matter for speculation. Whether SDR or gold, this is further evidence of Beijing's unease over its world's largest holdings of US dollars.....

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