Financing climate protection with newly created SDRs

Abstract

The centrepiece of the WFC proposal is the establishment of a financing tool that uses the ability of the IMF to create new international reserve money in the shape of Special Drawing Rights (SDRs). The intention is to support financing facilities such as the new Green Climate Fund established at the COP 16 in Cancun. The IMF member states can decide on the issuance of new SDRs. These are usually distributed to them proportionate to their quota shares. Pursuant to the agreement on the formation of the new Green Climate Fund, member states should agree in advance to commit all or most of the new SDRs to this Fund. A small portion (e.g. 10% – 20%) could be claimed by the member states for the financing of specific climate protection projects.