From billions to trillions: Towards reform of development finance and the global reserve system

The financial commitments to 2030 Agenda for Sustainable Development do not seem to live up to the ambitions of the SDGs. Rob Vos proposes reviving the old idea of using international liquidity, the IMF’s special drawing right, to leverage new development financing. This would strengthen the international financial safety net to deal with balance-of-payments crises and reduce the need for developing countries to take out ‘self-insurance’ against external shocks by accumulating vast amounts of their own reserves. This will take the international community some way in providing the global public good of global financial stability, while eliminating the deflationary bias on global economic growth implied by the present international monetary system. At the same time, using idle SDRs to leverage new development finance could yield as much as US$1 trillion in new development finance for the provisioning of other global public goods (like a stable climate and/or improved public health).

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