IMF says to study RMB`s use for next SDR basket
The board of International Monetary Fund (IMF) will reexamine the international use of yuan or Renminbi (RMB), the Chinese currency, when it reviews the currencies in the basket of the Special Drawing Rights (SDRs) later this year, the organization's spokesman Gerry Rice said Thursday.
Since the last review in 2010, "there have been a number of developments regarding the RMB's international use, and ... the upcoming review will take stock of these developments," Rice told reporters at a regular briefing. "That's something going to be happening toward the end of this year as I said."
Rice added that the IMF board essentially reviews currencies in the SDR basket every five years, with the next review to be scheduled for later this year, and the updates of the SDR basket will become effective in January 2016.
SDRs are international foreign exchange reserve assets. Allocated to nations by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need.
Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies, with a fixed amount of Japanese yen, US dollars, British pounds and euros.
Rice noted that the selections of currencies for the SDR basket are based on two criteria -- the size of the country's exports and whether its currency is freely useable. In the IMF's last review in 2010, "the RMB met the export criteria, but was assessed to not meet the freely useable criteria," said the IMF spokesman.
Rice's remarks came hours after a senior Chinese central bank official said that the country is "actively communicating" with the IMF on the possibility of including RMB into the SDR basket.
"We hope the IMF can fully take into account the progress of RMB internationalization, to include RMB into the basket underlining the SDR in foreseeable, near future," said Yi Gang, vice governor of the People's Bank of China, in Beijing Thursday.
However, China will be patient until conditions are ripe, Yi said at a press conference on the sidelines of the country's ongoing annual parliamentary sessions held in the national capital, adding that views are divided on whether the RMB is a freely usable currency.
"No matter whether and when the RMB will be included in the SDR basket, China will push on with its financial sector reform and opening-up," Yi said.
The RMB became the world's No. 2 currency for trade finance globally in 2013, and overtook the Canadian and Australian dollars to enter the top five world payment currencies last year, according to global transaction services organization SWIFT.
RMB has also been used as a reserve currency in some other countries outside China and regions.