* G20 must help poor countries’ stabilisation
* IMF should issue $250 bln special drawing rights a year
(Adds further details)
By Cecilia Valente
LONDON, March 31 (Reuters) - Billionaire investor George Soros said on Tuesday developing countries should be allowed to borrow from large countries’ quotas of international reserve assets issued by the International Monetary Fund (IMS).
Speaking at the London School of Economics ahead of the G20 summit, Soros said large countries could lend their quotas of IMF special drawing rights (SDR) to help their financial system’s stabilisation. Soros said Eastern Europe was a “prime candidate” for support. Soros, said the IMF in turn should issue up to $250 billion a year in SDRs for as long as the current recession lasts.
An SDR is an international reserve asset, created by the IMF thirty years ago to supplement the existing official reserves of member countries. SDRs are allocated to member countries in proportion to their IMF quotas.
Soros said Eastern Europe was a “prime candidate” for International Monetary Fund (IMF) support.
“It would make a tremendous difference to these developing countries, which would then engage in a domestic fiscal stimulus,” he said, adding however there should be “some control” to ensure the help is “properly spent.”
The billionaire investor also noted SDRs should not be seen as a currency: “I do not think America is ready to have the dollar replaced by SDRs as the international reserve currency,” he said, but added: “In the long term it is something that may come in consideration and in the long term it may be in America’s interest.”
He added gold would not be a good base for reserve currency either: “We are not going back to a gold standard.”
Last week the Times reported Soros as saying it was “conceivable” for Britain to seek help from the IMF but he said on Tuesday that posibility was “extremely remote”.
Soros said there was still a stigma attached to applying for IMF funds. “The concern in the UK shows there is a real stigma that is attached to (borrowing from) the IMF.