As Good as Gold

After five years of haggling, the ten major financial powers of the non-Communist world agreed last week in Paris to introduce an international money: paper gold. Called Special Drawing Rights, or SDRs, the new reserves will reduce nations' dependence on the diminishing supply of real gold in global finance and create new assets to sustain the growth of world trade. The SDRs will exist only in the ledgers of the International Monetary Fund. Its 111 member nations will be able to draw on these reserves to settle accounts among themselves, and central banks will have to accept them, just like gold, dollars or pounds. The step means that the IMF may one day regulate the world's money supply the way that central banks now regulate national currencies.

SDRs will be allocated to the IMF members in proportion to their quotas in the fund. The chief beneficiaries will be the U.S. and Britain. Under the deal reached in Paris, $3.5 billion in SDRs will be issued next year. More than $700 million will go to the U.S. An additional $3 billion will be issued in each of the succeeding two years. That is not quite as much as the U.S. hoped for as a start, but it is more than Continental nations wanted.

This compromise still has to be approved by several governments and finally by the IMF at its annual meeting in September. But agreement among the group of ten leading contributors to the IMF makes SDRs as good as gold.

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