The problem of international equity could not be solved by the fund. As such a new scheme of a Special Drawing Rights was instituted in 1969. under this scheme, the fund created as SDR 9.5 billion additional drawing facilities for its members.
Object of the scheme was to create new international reserve with the fund. it was common knowledge that there was acute shortage of international liquidity of international means of payment at that time. The total International Reserve of all the member of IMF were equivalent to 79 billion SDRs in 1979. of these, 39 billion has represented reserve with the IMF. The balance namely 33 billion SDRs forex reserves. In other word, gold represented 50% of total International reserves. Since gold was least used for transaction in those days, the remaining balance of 39 billion as there was considered to inadequate to meet International liquidity requirement of the world. The new scheme aimed at removing the shortage of international liquidity by creating new international reserve with the fund.
Functioning of SDR
Under the amendment rules, the activities of the fund was conducted under to separate accounts. the general transaction of the fund including the sale of foreign currency to member countries were conducted through general account but under SDR scheme, a new account must be opened a known as a special drawing account. all the operation and transaction involving special drawing rights were conducted through the special drawing account.
