Use SDRs for green funding in devlopiong countries: George Soros
16 Dec 2009
American currency raider turned stocks investor, self-styled philanthropist and political activist, George Soros has come up with his own formula to resolve the deadlock in the environment talks at Copenhagen, which has occurred mainly because the rich countries are unwilling to financially help developing countries deal with climate change.
According to Soros, a major reason why the developed countries are reluctant to make additional financial commitments is that they have just experienced a significant jump in their national debts, and they still need to stimulate their domestic economies.
Having attended climate meetings at the UN-sponsored Copenhagen summit recently, he says these countries may be able to cobble together a "fast-start" fund of $10 billion a year for the next few years.
The solution from the man who is also refered to the man who brought down the Bank of Englnd in 1972 and issupected of having triggered the Asian currency crisis in 1997, is that the developed countries should use their Special Drawing Rights - which in effect is money lying idle with the International Monetary Fund - to set up a special green fund serving the developing world.
In a recent newsletter circulated to subscribers, Soros - currently the world's 29th richest man - points out that in September 2009, the IMF distributed to its members $283 billion worth of SDRs, of which more than $150 billion went to the 15 largest developed economies.
If a country withdraws some of its SDRs and converts them into currency, it is liable to pay an almost nominal interest, which currently stands at 0.5 per cent. Meanwhile, the the SDRs will sit largely untouched in the reserve accounts of these countries, which don't really need any additional reserves, he says.
