Well, as an institution, the IMF was born out of the Brenton woods agreement, to fix the dollar to gold. Other countries could swap their notes for gold. At the time, this was to provide the rest of the world a stable currency of exchange. I mention this because the IMF only adopted the SDR in response from the divergence from gold and morphing into a fiat basket. Is the transition from gold to a basket more about stability or shared equity? I think it’s about sharing equity, stability next but subordinate to equity.
Let’s not forget that we are in a fiat experiment where limitless debt propels the world. By suggesting that a basket of currencies is more stable is to say less adverse to risk. Personally, I think bonds are transitioning to Liabilities and soon fiat. There are serious talks of negative interest rates, where it is costly to store money. When currency is not longer a storage of wealth the open and free market will fill it’s space.
If adverting risk is our goal we can consider pooling from a different asset class, maybe? If low variation is our goal the imo the dollar is still king. Japan is a mess, demographically and financially. Japan is exercising negative rates. Europe is facing an identify crisis and the euro is proving to be a burden on smaller economies. Negative rates have begun. Dollar is getting kicked out of settlements but everyone still needs to pay their debt in dollars creating the demand.
Not sure what’s next for Nu but it’s not the SDR, I hope.
