Just got this email from Eswar Prasad at Cornell and the Brookings Institution:
On the subject we talked about a couple of weeks ago, IMF just approved allocation of $250 billion worth of SDRs to give the global economy a shot in the arm. Quite interesting to have a global institution create money out of thin air !
SDR's are "Special Drawing Rights" issued by the International Monetary Fund. A country can exchange its SDR's for currency, dollars or whatever it needs. Since SDR's are backed by the world's governments and their central banks, new SDR's effectively expand the global money supply.
At least I think that's how it works.
Here's the IMF press release, and our story about whether SDR's might one dayunseat the dollar as the world's reserve currency.