IMF Admits Chinese Renminbi to Benchmark Currency Basket Alongside Dollar, Euro, Yen and Pound

crew-22312The International Monetary Fund on Monday admitted China’s yuan into its benchmark currency basket in a victory for Beijing’s campaign for recognition as a global economic power.

 

The IMF’s executive board agreed to add the yuan, also known as the renminbi, to its Special Drawing Rights (SDR) basket alongside the dollar, euro, pound sterling and yen, in a move earlier backed by IMF chief Christine Lagarde and in-house experts.

A vendor holds Chinese Yuan notes at a market in Beijing, August 12. The International Monetary Fund’s executive board agreed to add the yuan, also known as the renminbi, to its Special Drawing Rights basket, in a win for Beijing.

To meet the IMF’s criteria, Beijing has undertaken a flurry of reforms in recent months, including better access for foreigners to Chinese currency markets, more frequent debt issuance and expanded yuan trading hours.

The currency will have a 10.92 percent share, in line with expectations, after a review of the weighting formula for the SDR, which determines which currencies countries can receive as part of IMF loans.

The yuan’s inclusion is a largely symbolic move, with few immediate implications for financial markets.

But it is the first time an additional currency has been added to the SDR basket and the biggest change in its composition in 35 years.

Last set in 2010, the basket is currently 41.9 percent dollar, 37.4 percent euro, 11.3 percent sterling and 9.4 percent yen.

The yuan would not join until October 2016, allowing reserve managers time to prepare.

Under the new weighting, the euro’s share will drop to 30.93 percent.

Sterling and yen will also have lower weights while the dollar remains about the same.

To be included in the SDR basket, the yuan had to meet the criteria to be “freely usable,” or widely used to make international payments and widely traded in foreign exchange markets—a yardstick it missed at the last review in 2010.

The addition is likely to fuel demand for China’s currency and for renminbi-denominated assets as central banks and foreign fund managers adjust their portfolios to reflect the yuan’s new status.

Currency analysts estimate the IMF seal of approval could fuel demand worth more than $500 billion in coming years and take the yuan’s share of global reserve holdings to around 5 percent, overtaking the Canadian and Australian dollars.

 

THE END

About JCscuba

I am firmly devoted to bringing you the truth and the stories that the mainstream media ignores. Together we can restore our constitutional republic to what the founding fathers envisioned and fight back against the progressive movement. Obama nearly destroyed our country economically, militarily coupled with his racism he set us further on the march to becoming a Socialist State. Now it's up to President Trump to restore America to prominence. Republicans who refuse to go along with most of his agenda RINOs must be forced to walk the plank, they are RINOs and little else.
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5 Responses to IMF Admits Chinese Renminbi to Benchmark Currency Basket Alongside Dollar, Euro, Yen and Pound

  1. Pingback: IMF Admits Chinese Renminbi to Benchmark Currency Basket Alongside Dollar, Euro, Yen and Pound | Rifleman III Journal

  2. Pamela says:

    China’s red star is rising fast, while America’s glory as the world’s leading economic global power seems to be fading away into the distant twilight.
    It breaks my heart.

    Like

  3. Dave the Differentiator says:

    This change will affect the Global Economy and change the balance of power.

    BUT, America is still the leader for now. America has too much power for any Nation to ever make the mistake of threatening it.

    The history of technology and education remains with America. After the American Revolution it took many years for American aggression in education and technology to rise to the top – BUT it did.

    Cal Tech and MIT are still the world leaders in innovation accomplishments. The Chinese are working hard and fast but America is still at the top.

    Like

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