The International Monetary Fund (IMF)’s Executive Board has recently approved the “Hybrid Capital Instrument” as an eligible mechanism for channeling Special Drawing Rights (SDRs). This instrument, proposed by the Inter-American Development Bank (IDB) and the African Development Bank (AfDB), meets the IMF’s statistical criteria for reserve-asset status, so those countries that lend their SDRs through this mechanism can continue to account for them as reserves.

This innovative solution will allow to unlock new loans to be granted by Multilateral Development Banks (MDBs) in order to address growing global challenges, including climate and food security. The new instrument offers the opportunity to lend at least 4 dollars for every 1-dollar equivalent of SDR through the IDB, AfDB and other MDBs, to finance development projects.