One potential option could be greater use of rich countries’ Special Drawing Rights (SDRs), a form of reserve currency issued by the International Monetary Fund (IMF). While many G20 countries, including Australia, have redistributed some of their SDRs to poor countries through IMF trust funds, options to also use SDRs for loss and damage have been explored by Mark Plant from the US-based Center for Global Development. Plant argues that while the reserve asset strictures governing SDRs make their use challenging, “SDRs could be useful for financing some part of L&D [loss and damage] … within [a] narrowly defined set of procedures and institutions”. This could include the use of SDRs to mobilise additional finance via intermediaries like the World Bank or regional development banks.
