China in Talks to Include Yuan in IMF Basket, PBOC Official SaysFion Li
China is in talks with the International Monetary Fund to include the yuan in the institution’s basket of reserve currencies, according to a central bank official.
“We are evaluating this and are actively in talks with the fund,” People’s Bank of China Deputy Governor Yi Gang said at a press conference in Beijing Thursday. “We hope it can fully consider the progress of yuan internationalization, allowing the yuan to be part of the SDR basket in the foreseeable future.”
China is promoting the global usage of its currency as it seeks to liberalize domestic interest rates and open up capital markets. The yuan overtook Canada’s dollar to rank fifth for use in international payments in December, after passing the euro as the second-most used in trade finance in 2013.
The Washington-based IMF will later this year conduct a twice-a-decade review of the currencies in its Special Drawing Rights that members can count toward official reserves. The basket now comprises of the dollar, euro, yen and British pound.
The yuan “has no issues” in meeting the criteria in terms of global usage for the IMF review, Yi said, adding that it is heading “for the direction to be freely usable.” Awarding the yuan reserve-currency status will facilitate China’s financial reforms, he said.
There isn’t a need to adjust Hong Kong’s dollar peg as it has been “working well,” Yi said when asked if the city’s currency will be marginalized as the yuan becomes more popular in global trade.