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Accounts of the IMF in Member Countries: The IMF's unit of account, in which its financial records are kept is the Special Drawing Right (SDR). Members' currencies are valued by the IMF in terms of the SDR on the basis of their representative rates of exchange, normally against the U.S. dollar at spot market rates. Accounts and Departments. The IMF operates its financial functions through the General Department, the SDR Department, and the Administered Accounts, which are accounting constructs and not organizational units. The financial functions of the IMF are discharged by the Finance Department, which is an organizational unit of the staff. Q. 38/38 True False

Answer :

It is false. The IMF and other international organizations use the SDR as their unit of account. The SDR is not a form of payment nor is it an IMF claim.

The Bretton Woods fixed exchange rate arrangement gave rise to the SDR as an additional international reserve asset. The Bretton Woods system's demise in 1973 and the adoption of flexible exchange rate policies by the world's main currencies reduced the SDR's importance as a reserve asset. However, as was the case during the global financial crisis, SDR allocations can contribute to the expansion of member nations' official reserves by acting as a source of liquidity.

The IMF and other international organizations use the SDR as their unit of account. The SDR is not a form of payment nor is it an IMF claim. Instead, it could be a claim against IMF members' freely usable currencies. These currencies are exchangeable for SDRs.

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