The Link

Abstract

The basic notion behind the SDR link is very straightforward. It is that, since international financial systems confer benefits on the participating countries, decisions need to be consciously or subconsciously made about the distribution of these benefits. The link is a means by which it is intended to distribute a significant proportion of the benefits, or seigniorage, to developing countries. This argument is further endorsed by the claim that historically international financial systems have not involved distributional neutrality and that, in fact, most of the seigniorage has gone to the relatively rich countries in the world. The purpose of the link is to remove this apparent inequity.