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Congressional Research Service
nforming helegislative debate since 1914
Iran and Special Drawing Rights (SDRs)
December 8, 2023
The October 7, 2023, attack by Hamas (a U.S.-designated
foreign terrorist organization) on Israel and the ensuing
conflict have increased U.S. government scrutiny on Iran, a
longtime backer of Hamas. The United States maintains
broad economic sanctions against Iran and, following the
attacks on Israel, some Members have taken renewed
interest in further limiting the government of Iran's access
to international sources of financing.
The government of Iran's holdings of about $6.6 billion in
special drawing rights (SDRs) at the International Monetary
Fund (IMF) have emerged as a particular interest for
Congress. Some Members have expressed concerns about
Iran's SDRs through proposed legislation, letters to the
Biden Administration, congressional hearings, and public
statements.
What are Special Drawing Rights?
Created by IMF members in 1969, SDRs are international
reserve assets. SDRs are different from other reserve assets,
however, because SDRs are not physical assets (like gold or
silver) and SDRs are not a currency (like dollars or euros,
which governments can use to buy things).
Instead, SDRs are claims to the freely-useable currencies
(like dollars and euros, also called hard currencies) of IMF
members. If a government cannot access hard currency
through international markets at a reasonable rate, it can sell
some or all of its SDRs to another government in exchange
for hard currency. In this way, SDRs provide liquidity
support to governments.
To date, IMF members have created SDRs totaling about
$878 billion. The IMF generally allocates SDRs in
proportion to the size of a member's economy. The United
States has the largest SDR allocation, about $153 billion
(17.4%).
The SDR as a Unit of Account
The IMF sets the value of an SDR using a basket of major
currencies, currently the U.S. dollar, the euro, the renminbi
(RMB), the yen, and the pound sterling. The IMF publishes the
exchange rate between SDRs and other currencies daily.
The IMF uses the SDR as a unit of account-meaning that the
IMF reports monetary values in SDRs, rather than dollars,
euros, or other currency. For example, the IMF reports the
size of its loans in terms of SDRs rather than dollars.
The values discussed throughout this report are based on
values reported by the IMF in SDRs and converted to U.S.
dollars by CRS using the SDR/$ exchange rate of 1.329 on
December 7, 2023. Values noted in dollars are
approximations because they fluctuate with exchange rates.
I rans SDRs
Since 2001, Iran has held more SDRs than it has been
allocated (Figure 1). Countries with surplus SDRs (where
holdings exceed allocation) have purchased SDRs from
other members in exchange for hard currencies-that is,
countries with surplus SDRs have provided liquidity
support to other countries. The data suggests that Iran has
not liquidated its SDRs for at least two decades, in order to
gain hard currencies.
Figure I. Iran's Holdings and Allocations of SDRs
5
3
2
1
0
197 1980 0900
Allocation -- Hodn gs
Source: Figure created by CRS using data from the IMF's
International Financial Statistics.
Notes: Abrupt upticks in 2009 and 2021 reflect new SDR allocations.
As of end-October 2023, Iran's SDR holdings totaled about
$6.6 billion, while its SDR allocation totaled about $6.4
billion. Iran's share of SDRs is 0.73%.
Countries with surplus SDR holdings earn interest on these
holdings. In August 2023, the IMF paid Iran a quarterly
interest payment of about $1.8 million on Iran's surplus
SDR holdings and added it to its SDR holdings. The data
suggests that the Iranian government has not converted that
interest into useable currencies.
U.S. Policy
Two provisions in U.S. law require the Secretary of the
Treasury to instruct the U.S. Executive Director (USED) at
the IMF to oppose SDR transactions with any government
that supports acts of international terrorism (often referred
to as state-sponsors of terrorism [SSOTs]; see text box on
next page). The State Department has designated the
government of Iran as an SSOT since 1984.
Additionally, in 2021, the Treasury Department emphasized
that it retains the right to refuse SDR transactions with any
country whose policies run counter to U.S. interests.
The United States cannot prohibit another country from
engaging in SDR transactions with Iran. U.S. sanctions on
Iran, however, authorize sanctions on foreign entities that](ViewImageLocal?handle=hein.crs/govenqo0001&div=1&collection=&method=preview&ext=.png&size=3)