And also where the insurance motive of reserve accumulation prevails, it is not clear that enhanced access to IMF lending and regional pools, SDR allocations, or other forms of global liquidity provision could reduce the stigma attached to such external financing and thus avoid the further build-up of precautionary reserves. The cost of these insurance policies, on the other hand, can be substantial.
Large-scale “issuance” of SDRs could interfere with the implementation of monetary policy. Together with badly designed multilateral coordination on global liquidity conditions these could undermine central banks´ authority as the ultimate provider of liquidity and thus dangerously impinge on central bank independence across the globe.