For emerging economies facing volatile surges of capital flows, consideration needs to go even beyond to a broad range of scenarios relating to potential drains on reserves, including a sudden stop of new financing, withdrawal of foreign portfolio investments, capital flight, and current account vulnerabilities.
Further, the question of reserve adequacy cannot be resolved without addressing the broader issue of scarcity of safe reserve assets. Currency internationalization and the role of the SDR 12. In principle, it is desirable to develop a multi-currency system with several currencies operating as broad substitutes and reflecting changing economic weights and global realities.