Within the next few hours, China’s currency will join an elite group of global currencies used by the International Monetary Fund. The IMF has determined that the Renminbi meets its criteria of being “freely usable” in the international system.
CCTV America’s Daniel Ryntjes reports.
Under IMF decision, Yuan will join SDRThe IMF's Executive Board decided the renminbi will now represent just over 10 percent of the SDR basket of currencies - the third largest after the U.S. dollar and the euro.
One of the International Monetary Fund’s key roles in the global economic system is to set aside money and lend it to countries at times of difficulty. The goal is to stabilize their monetary systems.
The fund has allocated capital, using a system called Special Drawing Rights. Until now SDRs were a basket of four currencies: the U.S. dollar, the euro, the Japanese yen and the British pound Sterling.
The IMF’s Executive Board decided the renminbi will now represent just over 10 percent of this basket of currencies – the third largest after the U.S. dollar and the euro. The intention is to better reflect the realities of global trade and finance.
The decision was made possible because China has gradually shifted towards a currency management system which better reflects market forces, allowing the renminbi to become “freely usable” around the world.
The IMF views this shift in broad terms, predicting it will enhance the stability and growth of China and the International economy.
What are Special Drawing Rights?
Christine Lagarde on the significance of the RMB’s inclusion
CCTV’s Gao Qi spoke to Christine Lagarde, managing director of the IMF about the significance of the RMB’s inclusion.
Perry Wong discusses the Yuan joining the SDR Basket
For more on RMB in IMF SDR Basket , CCTV America’s Rachelle Akuffo spoke with Perry Wong, managing director of research at the Milken Institute.