UPSC Prelims 2010 · General Studies
Question 45: Economy and Social Development
Which of the following is/are treated as artificial currency ?
AnswerThe answer is (c).
Special Drawing Rights (SDRs) are an international reserve asset created by the IMF in 1969, allocated to member countries and valued against a basket of major currencies; they exist only as accounting entries, which is why they are called 'paper gold' or artificial currency. ADRs and GDRs are depository receipts: negotiable certificates that represent shares of a foreign company and trade on stock markets abroad. They are securities, not currency. Remember: SDR = IMF reserve asset; ADR/GDR = share receipts.
Why each option is right or wrong
- (a) An ADR is a receipt for shares traded in the US, not a currency.
- (b) A GDR is a receipt for shares traded on foreign exchanges, not a currency.
- (c) Right: the SDR is the IMF's artificial reserve asset.
- (d) An ADR is not a currency, so the combination is wrong.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2010, General Studies, Series A. The paper on upsc.gov.in.