Yuan close to reserve currency status
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A staff report was submitted to the International Monetary Fund's Executive Board, suggesting that Chinese yuan meets the requirements to become the fifth reserve currency.
The board on November 30 will review the "SDR Basket of Currencies".
Christine Lagarde, managing director of IMF, said that a key focus of the board review is whether the yuan, which continues to meet the export criterion for inclusion in the SDR basket, is “freely usable” or “widely used” for international transactions and “widely traded” in the principal foreign exchange markets.
She said that in the paper, the staff assesses that the yuan meets the requirements to be a “freely usable” currency and, accordingly, the staff proposes that the board determine the RMB to be freely usable and include it in the SDR basket as a fifth currency, along with the British pound, euro, Japanese yen, and the US dollar. The staff also finds that the Chinese authorities have addressed all remaining operational issues identified in an initial staff analysis submitted to the board in July.
“I support the staff’s findings. The decision, of course, on whether the RMB (yuan) 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.”
