Interview: IMF's review on inclusion of RMB in SDR basket underway: deputy chief
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E-mail Xinhua, April 20, 2015
The International Monetary Fund (IMF) is conducting a comprehensive assessment over the Chinese currency, or RMB, in its special drawing right (SDR) review to decide whether the currency will be included in the SDR currency basket or not, Zhu Min, deputy managing director of the IMF, said here on Sunday.
"A serious and comprehensive review on the Chinese currency is underway," Zhu told Xinhua as the IMF and World Bank Spring Meetings are drawing to a close.
The SDR, an international reserve asset, currently comprises U. S. dollar, Japanese yen, British pound and euro. Allocated to countries by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need.
According to the IMF, 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. The latter requires a certain degree of capital account convertibility.
During IMF's last review in 2010, the RMB met the export criterion, but not the freely useable criterion.
According to Zhu, the review this year will make full assessment on the use of RMB in commercial banks' liabilities, its share in global foreign exchange and derivatives transactions, its ranking in international reserves, and its proportion in the global bond market.
In addition to the technical statistics, the IMF will also review China's efforts to increase RMB capital account convertibility, said Zhu.
On Saturday, China's Central Bank Governor Zhou Xiaochuan said in a statement at the Spring Meetings in Washington that this year China plans to launch a series of reforms that target currently inconvertible items under the capital account, with the aim of further promoting capital account liberalization and making the RMB a more freely usable currency.
The IMF will fully evaluate China's capital account reforms in the SDR review, Zhu said.
As to when the RMB will be included in the SDR, Zhu said theoretically the SDR review will be concluded this year, but considering the complexity and the importance of the RMB, the IMF will remain flexible in terms of the timetable for the review.
Christine Lagarde, managing director of the IMF, said on Thursday that the Chinese authorities knew quite well what is desirable, what needs to be changed and improved in the monetary policy and in the financial sector in China.
"I believe what the Chinese authorities have actually indicated. ..will naturally be conducive to an assessment of whether or not the RMB is freely usable, which is as you know one of the key criteria," she said at a press briefing on the sidelines of the Spring Meetings.
The inclusion of RMB in the SDR has already received support from some advanced economies. During the Spring Meetings, British Finance Minister George Osborne said as part of the internationalization of RMB, it's sensible to see the RMB come into the basket. Endite
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