IMF agrees to include China's RMB in benchmark SDR currency basket

[Edison Chen]

The International Monetary Fund agreed Monday to add the Chinese yuan to its reserve currency basket.

The decision — which marks another step in China's global economic emergence — came after the IMF evaluated the Asian nation's standing as an exporter and the yuan's role as a "freely usable" currency. In a statement, IMF Managing Director Christine Lagarde noted the yuan's inclusion is a "clear representation of the reforms" taking place in China.

"The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy," Lagarde said.

The addition of the yuan, or renminbi, will take effect next October.

Lagarde and the United States had supported its inclusion in the basket, known as Special Drawing Rights (SDR). It will join the euro, yen, pound and dollar in the reserves basket. The yuan will have about an 11 percent weighting in the SDR.

The IMF said the yuan's inclusion will make the SDR more diverse and representative of the international community.

The basket determines the currency mix countries like Greece receive when the IMF disburses financial aid. The decision to add the yuan will likely increase demand for the currency.

 

[Edison Chen]

USD 41.73% weighting, EUR 30.93%, CNY 10.92%, JPY 8.33%, GBP 8.09%, proportion of 5 currency in the basket.

 

[Kyle Sun]

A great forward of Internationalization of RMB .

We will benefits a lot from this but we also lose the most important macro eco control methods.

We are facing both great opportunities and great challenges .

 

[TaiShang]

On step further. Many steps to go.

***
China's central bank welcomes IMF decision to include RMB in SDR basket

December 1, 2015
China's central bank, the People's Bank of China, announced early Tuesday morning that it welcomes the decision of the International Monetary Fund (IMF) to include China's currency renminbi (RMB) in the Special Drawing Rights (SDR) basket.

(Deleted my own thread having noticed it has already been created by Edison Chen).


@cirr , @Martian2 , @cnleio , @tranquilium , @AndrewJin , @Shotgunner51 et al.

 

[AndrewJin]

Great news!

 

[Beidou2020]

This is just the start of Renminbi internationalisation.

Having your currency included in the SDR basket only happens to the very elite economies in the world and is a recognition of China's importance in the global economy and a reward for the hard work done by Chinese people and government since the opening up in 1978.

Congratulations. China has come a long way.

 

[AndrewJin]

 

[cirr]

A new step forward on the road to national rejuvenation。

 

[Tauren Paladin]

I think this marks China as an economic superpower now, so it's no longer an emerging economic superpower anymore. The year 2015 is when China becomes an economic superpower.

 

[AndrewJin]

I think this marks China as an economic superpower now, so it's no longer an emerging economic superpower anymore. The year 2015 is when China becomes an economic superpower.

lol...Let the real supa powa have the title

 

[topgun047]

Congrats China.
Indian Rupee just became accepted currency on valve's gaming platform Steam about 10 days back .
Hopefully Rupee too will get there soon.

 

[beijingwalker]

 

[saiyan0321]

This is very good for china and showcases Chinese strength in the international market. It also highlights how China is slowly walking on the road towards becoming a very powerful and economical super power.

Let's see how things pan out. Congrats though. You guys really deserve it.

 

[meis]

China’s Renminbi Is Approved by I.M.F. as a Main World Currency

http://www.nytimes.com/2015/12/01/business...e-currency.html

 

[Shotgunner51]

This is another pragmatic progress made by IMF.

Along with correcting global imbalances, the goal is also to have an international reserve asset for central banks which will better reflect the global trade and economy. Any single currency, which is vulnerable to swings in the domestic economy and policy changes, does not meet the demands required of a reserve asset.

Zhou Xiaochuan and Strauss-Kahn, G-20 Finance Ministers and Central Bank Governor's Meeting, 2009

Back in 2009, as response to the financial crisis, Zhou Xiaochuan, Governor of the People’s Bank of China, gave a speech titled “Reforming the International Monetary System”, key points:

1. The need to create and utilize a supra-sovereign international reserve asset which is removed from the inherent deficiencies caused by the international use of national credit based currencies.
2. The potential of converting a percentage of foreign reserves into SDR.
3. Expanding the SDR to include, as a means of payment, currency of denomination for securities, commodity denomination, and elevation to the role as primary global reserve currency.

At its inception, SDR was valued at 0.888671 grams of fine gold, a fundamental change was replacement by a basket of currencies after collapse of Bretton Woods after 1971. Several pragmatic changes were made to the basket since then, including the 2016 addition of RMB as the 5th currency. RMB will initially make up about 11% of the SDR basket, allowing time for China to conduct more reforms before capital account is open for free exchange by the target time-line of 2020.

The SDR shall continue to reform. Possible future scenarios: Expand RMB weight to reflect trade and investment demand (bottom left scenario); Inclusion of other currencies like Swiss franc, Canadian dollar, Russian ruble, Korean won, Australian dollar (bottom middle); Inclusion of commodities like gold (bottom right).