IMF to review adding yuan to SDR basket in 2015
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E-mail CNTV, April 18, 2015
Christine Lagarde, managing director of the International Monetary Fund, has endorsed China's efforts in the internationalization of the Chinese yuan.
She says the IMF will review within the year, whether the Chinese currency is fit to be included in the basket that makes up the organization's Special Drawing Rights, or SDR.
Whether, if not when the Chinese yuan can join the virtual currency that defines the value of the IMF's reserves has been a global focus in recent years.
That's as the renminbi becomes the world's fifth most-used trade currency.
CCTV's Zou Yun caught up with IMF chief Christine Lagarde on Thursday to inquire when a decision can be made.
Q: "Madame Lagarde, when you were in Beijing last month, you said that the inclusion of RMB in the SDR basket is not a question of 'if', but a question of 'when'. So I just wonder what kind of efforts or measures the Chinese government could take in order to speed up this process. And also, later this year, the IMF is going to have the five-year review of the SDR. What kind of changes are we likely to see after this round of review?"
A: "Well, I was asked, probably unofficially, by the Chinese authorities, to include review of the current situation of the renminbi with a view to include it in the SDR basket. And the Chinese authorities know quite well what is desirable, what needs to be changed and improved in the monetary policy and in the financial sector in China. And I believe what the Chinese authorities have actually indicated in terms of liberalization of interest rates, in terms of opening up of the capital account, in terms of deepening of the financial markets, actually will natually be conducive to an assessment of whether or not the renminbi is freely usable, which is, as you know, one of the key criteria. The other one is the export capacity, and I think on that one, nobody has any doubt as to whether or not China fits the bill. As I said, it's technical work that needs to be applied to it on both sides, by the Chinese authorities themselves - and they've announced it - and by us to justly assess and determine whether that second criteria is actually met."
In short, Lagarde suggests that China's moves in deepening financial market reforms and liberalizing interest rates will benefit the currency at the review.
Meanwhile, the other criterion, the country's export capacity, would be no problem for the world's largest exporter.
Lagarde says the assessment by the IMF will come later in the year.
European members of the Group of Seven major industrialised economies, including Germany, Britain, France and Italy, have said they favor adding the yuan within the year to the SDR basket that comprises the dollar, the euro, the yen and the pound sterling.
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