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From the Opalesque Team:

In a report State Street released two days ago entitled: "Sovereign Wealth Funds: Emerging From the Crisis", George R. Hoguet, CFA, FRM argued in an essay " Sovereign Wealth Funds, Special Drawing Rights and the New Global Financial Architecture" that SWFs are well-positioned to promote a market in private SDRs (Special Dawing Rights), via the purchase of SDR denominated securities. The private use of SDRs could possibly facilitate greater public use.

The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. With a general SDR allocation taking effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs will increase from SDR 21.4 billion to SDR 204.1 billion (currently equivalent to about $317 billion).

Hoguet argues that SWFs could could potentially expand the market for SDRs as a part of wider efforts to manage global liquidity. Private markets in SDR-denominated instruments first emerged in 1975, but has not grown substantially since then.

Download the full State Street Report from Opalesque: Source

Today's Opalesque Sovereign Wealth Funds Briefing can be found here:......................

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