But it is not clear whether the Group of Seven -- Britain, Canada, France, Germany, Italy, Japan and the United States -- will be able to hammer out an agreement in time for their annual economic summit next week.
The plan has a little bit of something for everyone, although Russia would be the country that would likely benefit the most. The proposal has the added benefit of making use of resources from the International Monetary Fund, so that the United States and its allies would not have to dig into their own pockets for the money.
Under the plan, the IMF would act to build up the foreign exchange reserves of all 177 of its member nations through a general issue of its artificial currency, the Special Drawing Right, or SDR.
By issuing SDRs, the IMF basically creates money out of thin air.
The SDR issue would strengthen the financial underpinnings of IMF member nations and give them extra borrowing power -- of particular importance to developing nations and former communist countries.
IMF managing director Michel Camdessus has proposed a 36-billion SDR issue, worth about $50 billion, but the G-7 is unlikely to agree to such a large allocation, sources said.
The plan would also include a "catch-up" SDR issue to a selected group of nations. It would be aimed primarily at helping those that have joined the IMF since the last SDR allocation in 1981. Russia would be a major beneficiary.
Sources said all the G-7 countries support the catch-up SDR issue in principle, but they are divided over the general allocation. In a shift of policy, Washington has signaled it might be willing to accept a small, general SDR issue. But some industrial nations, most notably Germany, remain opposed, sources said.
Germany's powerful central bank, the Bundesbank, sees no need to increase global liquidity via a full-scale SDR issue and fears it could fan world inflation.
The question of the SDR issue is linked to a U.S. proposal to increase the potential size of IMF loans for both developing countries and the former communist bloc.
America's G-7 partners generally support the proposal.
IMF lending limits on both its stand-by loans -- which are available to all member nations -- and its structural transformation facility credits -- only available to the former communist bloc -- would be raised under the proposal.
Sources said developing nations have agreed to go along with the former, but are blocking the latter unless industrial nations agree to a general SDR allocation as well.
The developing nations have an effective veto because the proposed move would require 85 percent approval by IMF members.
To try to bridge the gap on SDRs, IMF staff have come up with yet another scheme that could effectively combine a general and catch-up issues in one, sources said.
Right now, Britain is the country with the biggest number of SDRs -- 25.8 percent -- in its reserves as a proportion of its shareholding, or quota, at the IMF.
Under the new scheme, the IMF would issue 16 billion SDRs, worth about $22.5 billion, to bring the SDR holdings of all other member nations up to that level.
To reassure Britain that it was not being left out, the new ratio could be set higher than 25.8 percent so that London could participate in the allocation as well.
The scheme was unveiled last week and it is too soon to say whether it will satisfy the competing interests of the developing world, Russia and the various members of the G-7.
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