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Basket of currencies determines the value of the SDR
The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies,today consisting of the euro, Japanese yen, pound sterling, and U.S. dollar. The U.S. dollar-equivalent of the SDR is posted dailyon the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.
The basket composition is reviewed every five years by the Executive Board, or earlier if the Fund finds changed circumstances warrant an earlier review, to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems. In the most recent review (in November 2010), the weights of the currencies in the SDR basket were revised based on the value of the exports of goods and services and the amount of reserves denominated in the respective currencies that were held by other members of the IMF. These changes became effective on January 1, 2011. The next review will take place by 2015. In October 2011, the IMF Executive Board discussed clarifications and possible reform options of the existing criteria for broadening the SDR currency basket. Most directors held the view that the current criteria for SDR basket selection remained appropriate.
The Chinese yuan is on track to become a global currency and could even displace the U.S. dollar as the world's reserve currency, experts say.
China is opening its financial markets to foreign investors and encouraging its currency to be used more in international trade, CNBC reports. Countries that have substantial trade with China, such as Australia, are among the first to base their trade settlements on the yuan, also called the renminbi, since it lowers their transaction costs.
International payments in the yuan jumped 24 percent in November from October, reaching a record 0.56 percent of the global total, CNBC reports, citing data from SWIFT, a transactions services organization.
http://seekingalpha.com/article/669911-what-will-replace-the-dollar
China is opening its financial markets to foreign investors and encouraging its currency to be used more in international trade, CNBC reports. Countries that have substantial trade with China, such as Australia, are among the first to base their trade settlements on the yuan, also called the renminbi, since it lowers their transaction costs.
International payments in the yuan jumped 24 percent in November from October, reaching a record 0.56 percent of the global total, CNBC reports, citing data from SWIFT, a transactions services organization.
http://seekingalpha.com/article/669911-what-will-replace-the-dollar
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