China, IMF to assess yuan for SDR
Print Edition
CHINA will work actively with the International Monetary Fund in assessing whether the yuan can join the IMF’s basket of currencies late this year, a senior official at the country’s foreign exchange watchdog said yesterday at a briefing.
Wang Yungui, director of the Comprehensive Department at the State Administration of Foreign Exchange, said including the yuan in the IMF’s basket of currencies, known as Special Drawing Rights, is an important strategy of top policy-makers to globalize the currency and lower financial risks.
Not being a fully convertible currency has halted the yuan from being included in the IMF basket, which includes the US dollar, yen, pound and euro.
The IMF last week said it had sent a delegation to assess the yuan’s inclusion.
“We are actively seeking to join the SDR, but it should be a natural and gradual process,” Wang said yesterday. “We will assess carefully and let the international community have a clearer idea of the international use of the yuan.”
China has continued to internationalize the use of the yuan by liberalizing cross-border capital flow and investment options.
New yuan clearing banks have been set up in Thailand, Australia and Chile; foreign currency fundraising and cross-border cash-pool services have been opened in the Shanghai Free Trade Zone; and the Shanghai-Hong Kong Stock Connect has been set up.
Next on the cards will be launching a trial program to pilot yuan convertibility with a quota, opening up cross-border investment to individual investors, and increasing connections among domestic and offshore securities exchanges, according to China’s monetary authorities.
The SDRs were introduced in 1969 as a foreign exchange reserve for lending to countries experiencing financial difficulties. Central banks holding the SDRs can exchange them for any freely used currencies.
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