The staff experts at the International Monetary Fund (IMF) said the Chinese yuan or renminbi meets the requirements to be a freely usable currency and proposes that the IMF include the currency in the Special Drawing Rights (SDR) basket of currencies.
This was the pronouncement of IMF managing director Christine Lagarde, who said in a statement that she supports the findings of the staff experts.
“I support the staff’s findings. The decision, of course, on whether the RMB should be included in the SDR basket rests with the IMF’s Executive Board. I will chair a meeting of the Board to consider the issue on November 30,” said Lagarde.
According to Lagarde, the staff experts reported to the IMF Executive Board their findings that the Chinese currency meets the requirements as a freely usable currency.
The staff, Lagarde added, also proposes to the IMF Executive Board to include the currency in the SDR basket as a fifth currency, joining the US dollar, the British pound, euro, and the Japanese yen.
Lagarde’s statement was immediately welcomed by China’s central bank, the People’s Bank of China (PBoC).
The PBoC said it sees a win-win result for both China and the world if the Chinese currency will be included in the SDR basket.
“It will strengthen the SDR’s representativeness and attraction and optimize current international currency system,” the official Xinhua news quoted PBoC authorities as saying.
According to earlier reports, the IMF has been generally receptive to the idea that the Chinese currency could join the SDR basket, which is composed of the US dollar, British pound, the euro, and Japanese yen.
But early this year, the IMF decided not to change the current SDR basket until 16 September 2016. That means China’s bid for its currency to become a global currency status will not happen in January as originally scheduled. – BusinessNewsAsia.com