China's yuan joins imf reserve elite

Photo: Japanexperterna.se

China's yuan has been elevated to a member of the IMF's reserve currency basket.

The country, which boasts the world's second largest economy, has been a significant force on the global financial stage, not to mention a major driver of activity in real estate markets around the world. Last year, the country asked to join the IMF's basket of reserve currencies, but its membership was refused due to concerns surrounding what was perceived as artificial control of the yuan's value.

Now, though, the IMF has approved the inclusion of the yuan in the elite group. The last Change was made in 2000 - the IMF review the selection every five years - when the euro replaced both the franc and the German mark. The yuan also joins the Japanese yen, the English pound and the US dollar.

The Board decided that the RMB met all existing criteria and, from 1st October 2016, will be determined to be a freely usable currency and will be included in the SDR basket.

Ms. Christine Lagarde, Managing Director of the IMF, hailed the decision as an "important milestone" in the integration of China's economy into the global financial system, as well as recognition of the progress that the Chinese authorities have made in reforming China’s monetary and financial systems.

"The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy," she added.