A link between the creation of Special Drawing Rights and the financing of development aid is under discussion in order to meet the developing countries' demands for an adequate supply with international liquidity. This article expounds critically a number of objections raised against this concept.

We test a simple model of exchange rate regime choice with data for non-OECD countries covering the period 1980-94. We find the variance of output at home and in potential target countries as well as the correlation between home and foreign real activity are powerful and robust predictors of...