The current SDR basket is as follows:
Recently, 1 U.S. Dollar has been around 0.73 SDR so let me fix this exchange rate for simplicity. With this assumption, the proposed UNCTAD coronovirus aid package would be 1.825 trillion SDR. Although there currently are 19 countries in the eurozone, since what I propose costs nothing to any country, I pick the largest eurozone economy, namely, Germany, to represent the eurozone in my description of the mechanism also for simplicity. It is up to the eurozone countries to decide how exactly to contribute their shares to the package, assuming that they agree with what I propose.
Note from the above table that 1.825 trillion SDR is the sum of below amounts in the component currencies:
What I propose is that the treasuries of the United States, Germany, China, Japan and the United Kingdom inject capital to the IMF by issuing zero-coupon perpetual bonds in their own currencies in the above respective amounts. I call these bonds the corona bonds. Since the IMF can maintain deposit accounts in the central banks of the above countries (in the case of Germany, in the European Central Bank), the IMF can sell the corona bonds to the central banks of the respective countries for increased balances in its deposit accounts for the respective amounts.
Hence, 1.825 trillion SDR is created for the IMF at no cost to these five countries and since the IMF deposits at these central banks are not reserves, there is no change in the base money of any of the countries.
