What is a Special Drawing Right? First, it is a kind of money. But it is not issued by a government, nor is it the currency of any country.
SDRs, as they are usually called, are created by the International Monetary Fund as an international money for its member countries. They can be used by governments to settle their debts with other countries, instead of using dollars or other ordinary currencies. Private firms, individuals and banks, on the other hand, cannot buy and sell SDRs nor use them as money.
An SDR is not printed as a note or minted into coins as are dollars, pounds, German marks and other currencies. It is a paper claim which can be transferred, on paper, between countries or exchanged into currencies.
Its value is based on a basket of currencies -- including the dollar and other major currencies -- so that its value against any individual currency changes as exchange rates move, thus altering the value of the total basket. Currently, an SDR is equivalent to about $1.30 in U.S. money.
Countries that are members of the fund are allocated a certain value of SDRs, in proportion to their size and economic strength and their own deposits of currency with the IMF. They may claim the SDRs from the fund and either hold them as reserves or transfer them to other member countries in payment of debt.