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IMF Approves Reserve-Currency Status for China's Yuan

DA60

DA60

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'The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan.

The International Monetary Fund’s executive board, which represents the fund’s 188 member nations, decided the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in its Special Drawing Rights basket, the organization said Monday in a statement. Approval was expected after IMF Managing Director Christine Lagarde announced Nov. 13 that her staff recommended inclusion, a position she supported.
It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010, saying it didn’t meet the necessary criteria.'

IMF Approves Reserve-Currency Status for China's Yuan - Bloomberg Business
 
DA60 said:
'The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan.

The International Monetary Fund’s executive board, which represents the fund’s 188 member nations, decided the yuan meets the standard of being “freely usable” and will join the dollar, euro, pound and yen in its Special Drawing Rights basket, the organization said Monday in a statement. Approval was expected after IMF Managing Director Christine Lagarde announced Nov. 13 that her staff recommended inclusion, a position she supported.
It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010, saying it didn’t meet the necessary criteria.'

IMF Approves Reserve-Currency Status for China's Yuan - Bloomberg Business
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It makes sense, if the currency is freely exchangeable. That has been known for a long time and I would hope that everyone has thought about the impacts and made ready for it.
 
http://www.debatepolitics.com/break...41165-chinas-yuan-set-imf-reserve-status.html

And what I basically said in that thread...

To have a better position in the basket of currencies as reserve status, I suspect that China would have to agree to financial and monetary policy reforms they may not be willing to adhere to. So any "Special Drawing Rights" would be diminished by the level of yuan currency used as actual reserve status (as in the next step after its inclusion as a possibility in these rights.)
 
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