The International Monetary Fund (IMF) said on Friday its executive board has backed a $650 billion allocation of IMF Special Drawing Rights, advancing the distribution of currency reserves to the IMF's 190 member countries towards a targeted completion by the end of August.
IMF managing director Kristalina Georgieva said she will now present the SDR allocation proposal, the largest in the Fund's 77-year history, to its board of governors, with representatives from every IMF country.
"This is a shot in the arm for the world," Ms Georgieva said ahead of a G20 finance ministers and central bank governors meeting in Venice.
"The SDR allocation will boost the liquidity and reserves of all our member countries, build confidence and foster the resilience and stability of the global economy."
The IMF in 2009 distributed $250bn in SDR reserves to member countries to help ease a global financial crisis.
The SDR is the IMF's unit of exchange and is made up of a basket of currencies – dollars, euros, yen, sterling and yuan.
To spend their SDRs, countries would first have to exchange them for underlying hard currencies, requiring them to find a willing exchange partner country.
Ms Georgieva said the new SDR allocation, initially backed by the G20 major economies in April, would have a positive effect on every IMF member country and will particularly help vulnerable countries to strengthen their response to the Covid-19 crisis.
She said the fund would actively engage with member countries in the months ahead to "identify viable options for voluntary channeling of SDRs from wealthier members to support our poorer and more vulnerable countries".
G20 finance officials are expected to discuss potential SDR contribution mechanisms over the next two days, to low-income countries as well as to some vulnerable middle-income countries and small island states.