S.D.R. in Maritime Law

Note: There is more information on maritime/admiralty law here.

The following is a definition of S.D.R. , produced by Tetley, in the context of admiralty law: [Translation of S.D.R. in French: “D.T.S.- Droits de tirage spéciaux”] [Translation of S.D.R. in Spanish: “Derechos especiales de giro”] [Translation of S.D.R. in Italian: “D.S.P., diritti speciali di prelievo”] [Translation of S.D.R. in German: “Sonderziehungsrechte”] – Special Drawing Rights are an international value used to provide a regular comparative evaluation by the International Monetary Fund of the currency of member nations. Value of a national currency will rise in S.D.R.s as the value of the national currency rises on the world market. S.D.R.s therefore are a fair evaluation of the comparison of national currencies one with another and as such useful as a valuation for limitation in an international convention. If S.D.R.s adjust to the rise and fall of the currency of a single nation as compared with other nations, they do not adjust to world inflation and as a result, the limitation of liability in S.D.R.s in various conventions has fallen as all currencies have inflated. In this respect, S.D.R.s are unsatisfactory. Gold does adjust to world inflation over very long periods of time, but in the short run suffers violent fluctuations in value. Gold has also been controlled in price by many countries at various times. Both S.D.R.s and gold suffer from the reluctance of many nations to comply with a market evaluation of their currency.

The value of the S.D.R., as established by the IMF with effect from January 1, 2001, is equal to the market value of fixed amounts of four currencies, the U.S. dollar 45%, the euro 29%, the Japanese yen 15% and the British pound sterling 11%. (Up to December 31, 1980, there were 16 currencies in the basket). If any of the component currencies weaken, the assumption is that other component currencies will strengthen, thus moderating fluctuations in the S.D.R.’s value. The criteria selecton of currencies for inclusion in the S.D.R. valuation basket are: 1) the currencies of those member countries of the IMF which are the largest exporters of goods and services (including exports by a monetary union that includes IMF members); and 2) currencies which are “freely usable” in acordance with Article XXX(f) of the IMF’s Articles of Agreement, being ones which the IMF’s Executive Board determines are in fact widely used to make payments for international transactions and are widely traded in the principal foreign exchange markets. The weights assigned to the currencies in the S.D.R. basket continue to be based on the value of the exports of goods and services and the amount of reserves denominated in the respective currencies which are held by other members of the IMF. The basket composition is reviewed every five years to ensure that it reflects the relative importance of currencies in the world’s trading and financial systems.

As at March 2007, the S.D.R. was worth approx. $1.77 Cdn., or approx. $1.50 U.S., or approx £0.77 (pound sterling), or approx. ?1.14(euro) (see this maritime law term in this legal dictionary) .






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