Yuan proposed as reserve currency by IMF.
International Monetary Fund chief Christine Lagarde said in a statement that the staff experts, in their report to the International Monetary Fund board, ruled the yuan or renminbi (RMB) “meets the requirements to be a “freely usable” currency”.
According to the IMF, a key focus for the Board review is whether the RMB, which continues to meet the export criterion for inclusion in the SDR basket, also meets the other existing criterion, that the currency be “freely usable”, which is defined as being “widely used” for worldwide transactions and “widely traded” in the principal foreign exchange markets. Beijing has been campaigning for its currency to join the Special Drawing Rights (SDR) basket, which could increase demand for the yuan among reserve managers and mark a symbolic coming of age for China’s economy. The fund’s executive board will take up the issue November 30.
It says a staff level agreement was reached to lower the target for the primary surplus to 7.25 per cent of gross domestic product (GDP) for this fiscal year and to seven per cent of GDP for the next fiscal year.
If the yuan’s addition wins 70 percent or more of International Monetary Fund board votes, it will be the first time the number of currencies in the SDR basket – which determines the composition of loans made to countries such as Greece – has been expanded.
Joining the basket would give the yuan the IMF’s seal of approval and might encourage foreigners to use the Chinese currency more and to have more confidence in China’s financial markets.
“The People’s Bank of China welcomes the statement of Mme”.
In future, China will unswervingly continue to push forward the strategic plan of comprehensively deepening reform and will steadily promote financial reform and opening up, it said.
In 2013, Jamaica entered into a four year US$948.1 million EFF agreement with the International Monetary Fund and she said consideration of the policies will be undertaken by the IMF’s executive board, tentatively scheduled for December.
