Is the IMF turning into the world's central bank?
At the Bretton Woods (USA) conference in 1944, it was decided that the US dollar receives the status of a world currency and is equated with gold (the gold dollar standard). If we count from the time of ratification of the conference documents and their entry into force, the world has been living with the dollar as the world currency for exactly 75 years.
But even in those distant years, the most competent economists, financiers and politicians understood the inferiority of such a global monetary system. For example, the head of the English delegation at the conference is the famous economist and official of the English Treasury, John Maynard Keynes. This was also understood by many politicians in the US Capitol, who did not want to ratify the documents of the conference (the approval of the decisions of the Bretton Woods in the US Congress was achieved with great difficulty).
Finally, the American economist Robert Triffin in the early 60s formulated the so-called "paradox" (or "dilemma"), which was later named after him. Triffin's dilemma is simple: the country whose monetary unit is used as the world currency is doomed to economic collapse. For the reason that the exit of such a monetary unit outside the country and filling the world economy with it is possible only if there is a stable deficit in the country's balance of payments. And such a constant deficit inevitably leads to a weakening of the economy and its death.
Life has confirmed the correctness of such reasoning. In the 1960s, the US trade and payment balances became steadily deficient, the US dollar began to conquer the whole world, and America showed the first signs of economic weakening. In addition, it began to rapidly lose its gold reserves (since back in 1944 it guaranteed the free exchange of the dollar for the precious metal from the reserves of the American Treasury).
At the turn of the 60-70s, the Bretton Woods currency system was already bursting at the seams. The final verdict was pronounced on May 15, 1971, when American President Richard Nixon announced that the US Treasury was temporarily stopping the exchange of dollars for gold. Everyone understood perfectly well that this is not "temporary", but forever.
Everyone was preparing for the fact that the gold dollar standard would be replaced by the model of the world monetary system that was proposed at the 1944 conference by John Keynes. His project was that humanity should gradually move to a global supranational currency, which he called "bancor". And the issuer of such a currency should be an international financial organisation, which he called the "international clearing house".
There were signs that this model would replace the gold dollar standard. The main sign of the expected reform is the issuance by the International Monetary Fund of a new monetary unit called "Special Drawing Rights" - SDR (SDR).
This was done on January 1, 1970. There were two more issues before 1972. In 1970-1972, the IMF issued SDR totalling 9.3 billion units. This was the so-called "first SDR distribution". Each SDR unit was equivalent to 1 US dollar. The new currency was a very specific money. They were exclusively non-cash. SDR issues were distributed among the Fund's member countries in proportion to their shares in the IMF's capital.
The new currency could be provided in the form of loans by one member of the Fund to another, i.e. the circulation of the SDR could be carried out only through the accounts of the member states of the Fund. The new currency was intended to help the Fund's member countries and, if necessary, straighten their balance of payments and maintain the stability of national currencies (fixed exchange rates are the cornerstone of the Bretton Woods system). The monetary unit of the SDR was informally called "paper gold".
However, the expectations of those who believed that the SDR would replace the gold and foreign exchange standard were not justified. It was replaced by the paper-dollar standard, which was recorded in the decisions of the 1976 Jamaica Conference. Nevertheless, the Fund did not forget about the SDR. In the period 1979-1981, there was a "second distribution of SDR" (three issues), as a result of which an additional 12 billion SDR units (in total - already 21.3 billion units) appeared on the accounts of the Fund's member countries.
Almost no one mentioned the SDR after 1981. Of course, experts knew about this currency, which was on the accounts of the IMF member countries and was included in their international reserves. But the share of the SDR in the Fund's capital and in the international reserves of the member countries was very insignificant.
Only after 18 years was the SDR remembered again. A global financial crisis broke out in the world. All means were thrown to extinguish this fire. And they also remembered the possibility of the Fund to create new money, called SDR. On August 28, 2009, the issue of SDR was carried out in the amount of 161.2 billion units. This was almost eight times the mass of all previously created SDR. On September 9, the Fund issued another 21.5 billion SDR units. The August-September 2009 issues are considered the "third SDR distribution".
As a result, the total volume of issued SDR currency in September 2009 reached 204.1 billion units. By this time, the SDR was no longer equated to the US dollar, but was more expensive than the latter. Therefore, in the equivalent of the US currency, the volume of accumulated SDR was already equal to about $250 billion. According to the IMF, the total gold and foreign exchange reserves of all member countries of this organisation amounted to $7.771 billion.
It turns out that at the end of the first decade of this century, the share of SDR in the international reserves of the Fund's member countries was approximately 3.2%. This is already a more noticeable presence of the new currency than before the financial crisis of 2008-2009 (back then it was measured in fractions of one percent).
It is known that after the end of the financial crisis of 2008-2009, the Fund conducted a "debriefing" and came to the conclusion that the Fund, together with its members, could not cope with the next crisis. It was necessary to take preventive measures to strengthen the global monetary system. And one of the strategic directions of such work was the preparation for the issuance of new tranches of SDR and increasing the share of "paper gold" in the capital of the Fund and the international reserves of the member countries. As well as the removal of strict restrictions on the use of SDR.
It was proposed to withdraw the SDR from the circulation circuit between the accounts of the Fund's member countries and use the new currency for various investment, credit and trade operations of international financial organisations (not only the IMF, but also the World Bank, the Bank for International Settlements, regional development banks). Then allow operations with SDR to state organisations of the Fund's member countries. And, in the end, make the SDR the same universal currency as the US Dollar, Euro, British Pound, etc.
On February 22 of this year, The Daily Reckoning published an article entitled "The Great Reset Is Here". Its author is Jim Rickards – an economist, lawyer and well-known person in the world of finance. He was the main government negotiator at the time of the rescue of the hedge giant Long Term Capital Management in 1998.
The author of the acclaimed book "The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis”, which was released in 2016. Currently, he is the Chief Managing Director of Market Intelligence at Omnis, Inc.
Jim Rickards reveals some secrets of the Fund's preparation for replacing the dollar with "paper gold” SDR: “On 07.01.2011 the IMF released a master plan for replacing dollars with SDR. It included the creation of the SDR bond market, SDR dealers and auxiliary mechanisms, such as REPO operations, derivatives, settlement and clearing channels, as well as the entire apparatus of the liquid bond market."
Let me remind you that Dominique Strauss-Kahn was the executive director of the IMF at that time. He actively supported the project of switching from the dollar to the SDR, for which he paid. Supporters of the preservation of the paper-dollar standard (the main shareholders of the US Federal Reserve) organised a well-known provocation against Strauss-Kahn. And already in May 2011, he lost the post of executive director of the Fund, an investigation began against him.
And now exactly ten years have passed since then. Today, the situation is already different. The dollar as a world currency is doomed. Betting on the dollar is useless and dangerous. The Fund is looking for "spare airfields". And no one can think of a better "spare airfield" than the SDR. The SDR is not only a lifesaver for the world, which may enter a phase of acute economic and currency crisis. The SDR is a chance for the International Monetary Fund to become a world central bank that could replace all the current central banks – the US Federal Reserve, the ECB, the Bank of England, the Bank of Japan, etc.
The viral economic crisis that began last year demanded from many countries such money that they did not have. Of course, those countries whose currencies are called "reserve" have such sources of money as the "printing presses" of central banks. During the year of the so-called "pandemic", the US Federal Reserve, the ECB, the Bank of Japan, the Bank of England and the People's Bank of China threw into circulation an additional money supply in excess of $10 trillion.
This method of dealing with a "pandemic" is like a time bomb. Sooner or later, there will be an explosion in the form of high inflation or even hyperinflation. The Dollar, Euro, British Pound and other reserve currencies will collapse. The world may be in a state of chaos. Of course, some countries are preparing their individual "spare airfields" in the form of digital currencies of central banks or gold reserves.
And the Fund, as it should be according to its status, is preparing a "spare airfield" in the form of an SDR for all mankind. The Fund would like to start a large-scale issue of "paper gold” without waiting for the global crisis. The Fund conducted active consultations with the main shareholder-the US. But the previous US President, Donald Trump, was against such a step.
Why? Probably, partly because a number of member countries of the Fund linked the issue of a new tranche of SDR with the issue of quotas in the Fund's capital. Many countries have demanded and continue to demand a revision of quotas (shares) in the capital, believing that the US and a number of Western European countries have unfairly large quotas. And if a large-scale SDR issue is carried out, then most of this issue will go to a small handful of Western countries. And Washington resisted the revision of quotas, not only because of banal greed, but out of fear that it will lose a "controlling stake” in the Fund.
But with the arrival of Joe Biden in the White House, "the ice has moved”. The White House gave the "green light" to prepare a new issue of SDR. As Jim Rickards writes in the article mentioned above, some Democratic senators are in favour of issuing SDR in the amount equivalent to $2 trillion or even more. In fact, they view the Fund as another "printing press" - the same as the "printing press" of the US Federal Reserve.
But they decided to limit the appetites of such gambling politicians a little. In the spring of this year (March 23), the IMF board of directors made a "technical decision" to prepare for the issuance of SDRs in the amount equivalent to $650 billion (approximately 455 billion SDR). And to hold the release, if possible, before the end of this summer.
The Fund is in a hurry with such a large-scale issue of SDR not only because it wants to have time to prepare for the inevitable global economic crisis. It was given the command "from above" to actively engage in solving such global problems as universal vaccination of the population and the fight against climate warming.
Two-thirds or three-quarters of all the member countries of the Fund verbally support these noble goals, but complain that they have no or almost no financial resources to solve these global problems. So the Fund wants to benefit everyone at once by issuing SDR, which will be 2-2.5 times higher than the total volume of all previous issues since 1970.
However, it is already becoming clear that the amounts that the third world countries will receive from the expected SDR issue will still not be enough for all projects and programs. They need at least another $100 billion. The West, of course, does not want to revise quotas in favour of third world countries for this. It won't take long to lose control of the Fund. Many Western countries say that they are ready to share part of the received "paper gold" with third world countries "on a voluntary basis". In general, much is still not clear with the upcoming distribution of SDR.
According to Jim Rickards, mentioned above, in the near future, the Fund may begin reforming the procedure for distributing issued SDR. The new tranches of "paper gold" will be distributed not only among the member countries. Some of the issues will be transferred to international organisations such as the World Bank or the United Nations. And they, in turn, will direct the money received for vaccination, the fight against pandemics, climate change and other purposes.
Decisions on the distribution of money will be made by officials who are not accountable to national states. Here is a fragment of Jim Rickards' statements on this topic: "In the next few years, we will see the issuance of SDR for international organisations such as the UN and the World Bank, which will be spent on climate change infrastructure and other favourite projects of the elites without the supervision of any democratically elected bodies."
In June, a meeting of the G7 was held in England. Most of the media highlighted the following key issues of the meeting: vaccination in the world; the fight against climate change; measures to stabilise the world economy. Another key topic has been undeservedly forgotten: the issue of the SDR issue by the International Monetary Fund.
All participants unanimously supported such an issue. Everyone agreed on the initial amount (the equivalent of $650 billion) and the timeframe (until the end of summer). The issue raised at the meeting about finding an additional $100 billion for developing countries to carry out vaccinations and combat climate was not resolved. Discussions on this topic will probably be transferred to the Board of Directors of the Fund.