I put the exclamation points there because, OK, it sounds dull. Bonds, you think, are dull. International Monetary Funds, probably more so.

But this is one of those stories that brushes up against the profound.

The news: The International Monetary Fund has decided to issue what could be $70 billion dollars worth of bonds. It's the first time the IMF has raised money through bonds. The fund has been short of cash to lend out because of the financial crisis.

The interesting bit: The bonds are denominated in a kind of synthetic currency called Special Drawing Rights (SDRs). SDRs are used internally at the IMF as units of account. But China has proposed turning them into a new kind of global currency that could one day replace the dollar's central role.

The IMF's official position: "The dollar is the principal reserve currency in the global economy and will remain so as far as we can see."

We'll have a story on All Things Considered tonight, with commentary from Eswar Prasad who used to run the IMF's China division. About the bonds, he writes "A Win-Win Proposition? Almost, but Not Quite"

categories: Fun With Economics

2:27 - July 2, 2009

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