FXStreet (Córdoba) – The International Monetary Fund approved the inclusion of the Chinese renminbi in its SDR (Special Drawing Right), a unit of accounting. Now the Renminbi will be included as one of the world’s central bank reserve currencies joining the USD, JPY, EUR and GBP. The RMB will be included from October 1, 2016.
“A key focus of the Board review was whether the Chinese renminbi (RMB) met the existing criteria to be included in the basket. The Board today decided that the RMB met all existing criteria and, effective October 1, 2016 the RMB is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the euro, the Japanese yen and the British pound. Launching the new SDR basket on October 1, 2016 will provide sufficient lead time for the Fund, its members and other SDR users to adjust to these changes”, said the IMF in a statement.
Christine Lagarde, Director IMF Managing Director affirmed that “is an important milestone in the integration of the Chinese economy into the global financial system. It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems”.
According to the IMF the inclusion of the RMB will enhance the attractiveness of the SDR by diversifying the basket and making it more representative of the world’s major currencies. According to Bloomberg the RMB will have a 10.92% weight on the SDR while EUR weight will be cut from 37.4% to 30.93%.
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