Why China’s Yuan Is Set to Join IMF’s Elite Club: QuickTake Q&A
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From Oct. 1, China’s yuan gains a new status as a member of the International Monetary Fund’s Special Drawing Rights (SDR) basket. That makes it part of one of the global economy’s most exclusive, if esoteric, clubs.
SDRs were created by the IMF in 1969, when the world’s governments needed assets for their international reserves and there wasn’t enough gold or dollars to go round. While the SDR isn’t a currency itself, its holders have a claim on the currencies in the basket. The yuan’s addition is the first change to the SDR basket since 1999, when the euro replaced the deutsche mark and the French franc. The weightings will be: