In September 2008, the crisis intensified as uncertainty in international markets was raised considerably when Fannie Mae and Freddie Mac were placed under conservatorship, and when Lehman Brothers – which had been a major counterparty in the credit derivatives and swap market – went bankrupt. The uncertainty was further heightened by massive write-downs and liquidity problems of large international banks and insurance companies.
While the level of international co-operation has certainly increased since the crisis, it would be a stretch to assert that there is any appetite for the creation of the independent global central bank that would be required.13 As a result, any future SDR issuance is likely to be ad hoc.14 A substitution account Greater use of SDRs might be best suited to encouraging a transition to a more stable international monetary system by facilitating any desired reserve diversification.