Chinese Yuan gets IMF endorsement

IMF officially includes yuan in SDR currency basket


Starting from October 1, the Chinese yuan will, as the fifth currency, be included into Special Drawing Rights (SDR) basket of the International Monetary Fund (IMF) along with the US dollar, the Euro, the Japanese yen and the British pound.

Hailing the inclusion of the yuan into the SDR basket, IMF Managing Director Christine Lagarde said at the just-concluded G20 Summit that it is an important milestone for the reform of the international monetary system.

The inclusion came amid repeated turbulence in global financial market since the beginning of this year. As the US, Europe and Japan adopted different monetary policies, the US dollar was regarded as a shelter by global capital, but such choice increased the uncertainty of the financial market as a result.

Sergio Ermotti, the CEO of UBS, spoke highly of China’s leadership in coping with the Asian and global economic crises. He said that the yuan, which is now seen as a strong currency, will contribute to a more robust and stable international monetary system after joining the SDR basket.

As China has devoted unremitting efforts in yuan’s internationalization in recent years, its inclusion into the SDR basket can be seen as a big breakthrough, experts noted.

China has been calling for a broader use of SDR. Those detailed measures, including taking SDR as reporting currency and issuing SDR-denominated bonds, have been agreed by G20 leaders in their Hangzhou communique.

Besides, China has released a report on foreign exchange reserve with SDR as reporting currency, and also authorized the World Bank to sell SDR-denominated bonds in its territory. The size of the new issuance program is 2 billion SDRs and the yuan will be used as the settlement currency.

Source: People’s Daily

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