The term ‘paper gold’ refers to :

The correct answer is Special Drawing Rights (SDR) of IMF.

Key Points 

• The term ‘paper gold’ refers to the Special Drawing Rights (SDR) of IMF.
• Special Drawing Rights (SDR):
  • The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members.
    • SDRs can be exchanged for these currencies.
  • The SDR serves as the unit of account of the IMF and some other international organizations.
  • The currency value of the SDR is determined by summing the values in US dollars, based on market exchange rates, of an SDR basket of currencies.
  • The SDR basket of currencies includes the US dollar, Euro, Japanese yen, pound sterling and the Chinese renminbi (included in 2016).
  • The SDR currency value is calculated daily (except on IMF holidays or whenever the IMF is closed for business) and the valuation basket is reviewed and adjusted every five years.
  • Quota (the amount contributed to the IMF) of a country is denominated in SDRs.
  • Members’ voting power is related directly to their quotas.
  • IMF makes the general SDR allocation to its members in proportion to their existing quotas in the IMF.
  • India's foreign exchange reserves also incorporate SDR other than gold reserves, foreign currency assets and Reserve Tranche in the IMF.​

Additional Information 

• International Monetary Fund (IMF):
  • The IMF was set up along with the World Bank after the Second World War to assist in the reconstruction of war-ravaged countries.
  • The two organizations were agreed to be set up at a conference in Bretton Woods in the US. Hence, they are known as the Bretton Woods twins.
  • Created in 1945, the IMF is governed by and accountable to the 190 countries that make up its near-global membership. India joined in December 1945.
  • The IMF's primary purpose is to ensure the stability of the international monetary system — the system of exchange rates and international payments that enable countries (and their citizens) to transact with each other.
  • Its mandate was updated in 2012 to include all macroeconomic and financial sector issues that bear on global stability.
  • Reports by IMF:
    • Global Financial Stability Report
    • World Economic Outlook.