Reserve assets are financial instruments that a central bank or a government holds to implement monetary policy and ensure financial stability. These assets are crucial for maintaining liquidity, managing exchange rates, and backing up domestic currency.
Special Drawing Rights (SDRs) are supplementary foreign exchange reserve assets, created and maintained by the International Monetary Fund (IMF). Known informally as 'paper gold', SDRs were first issued in 1970 with the aim to supplement member countries' official reserves, providing liquidity and enhancing global financial stability.
