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Why did the International Monetary Fund create Special Drawing Rights in 1969?

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Headquarters of the International Monetary Fund — International Monetary Fund A view of the International Monetary Fund headquarters, Washington, D.C.

The International Monetary Fund (IMF) created Special Drawing Rights (SDRs) in 1969 to serve as an international reserve asset that would supplement members' existing holdings of foreign currencies and gold.1

The primary motivation for this development was to address a systemic limitation: the existing international monetary system struggled to create an adequate quantity of reserves without requiring the United States to run large, unsustainable balance-of-payments deficits. By introducing SDRs, the IMF provided member countries with a new mechanism to settle international debts without relying solely on national currencies or gold.21

Unlike ordinary Drawing Rights, which are subject to specific conditions and repayment obligations, SDRs were designed to be more flexible. They allowed for the discharge of international indebtedness with minimal repayment requirements and were accepted as a final settlement of debt without needing to be converted into a specific national currency.2