IMF Review & Official Answered Press Question On Review

Economics

IMF Confirms RMB Meets Criteria For SDR Inclusion
November 14, 2015   By JC Collins
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Christine Lagarde of the International Monetary Fund has just put out a statement regarding the inclusion of the Chinese renminbi in the Special Drawing Right basket.  Thanks to reader “cadwaladr” for catching this so fast and bringing it to our attention.
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This one statement validates almost two years of the POM analysis. When so many said it would never happen, and when so many said China would never have their currency join the SDR, this one moment in time, and the followup announcement on November 30th, will change the course of international reserve accumulation and separate the wheat from the chaff. 
 
Whether its a straight SDR inclusion, or an SDR2 type scenario, the monetary world is on the verge of a fundamental change.  – JC

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Statement by Ms. Christine Lagarde on IMF Review of SDR Basket of Currencies

Press Release No. 15/513  November 13, 2015

Ms. Christine Lagarde, Managing Director of the International Monetary Fund (IMF) issued the following statement today:

"The staff of the IMF has today issued a paper to the Executive Board on the quinquennial review of the SDR. A key focus of the Board review is whether the Chinese renminbi (RMB), which continues to meet the export criterion for inclusion in the SDR basket, also meets the other existing criterion, that the currency be “freely usable”, which is defined as being “widely used” for international transactions and “widely traded” in the principal foreign exchange markets.

"In the paper, IMF staff assesses that the RMB meets the requirements to be a “freely usable” currency and, accordingly, the staff proposes that the Executive Board determine the RMB to be freely usable and include it in the SDR basket as a fifth currency, along with the British pound, euro, Japanese yen, and the U.S. dollar.
 
The staff also finds that the Chinese authorities have addressed all remaining operational issues identified in an initial staff analysis submitted to the Executive Board in July.
"I support the staff’s findings. The decision, of course, on whether the RMB should be included in the SDR basket rests with the IMF’s Executive Board. I will chair a meeting of the Board to consider the issue on November 30."
 
IMF COMMUNICATIONS DEPARTMENT
Media Relations  E-mail: media@imf.org  Phone: 202-623-7100
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Yuan set to join IMF’s SDR basket
From livemint.com

IMF says the RMB meets the requirements to be a ‘freely usable’ currency
Mumbai: The Chinese Yuan is set to become part of the International Monetary Fund’s (IMF) special drawing rights (SDR) basket after staff at the IMF said that the currency is seen as “freely usable”.

In a statement issued last night, Christine Lagarde, managing director of the IMF said that a staff paper presented to the executive board had examined the issue ahead of a board review due at the end of the month.
 
“In the paper, IMF staff assesses that the RMB meets the requirements to be a “freely usable” currency and, accordingly, the staff proposes that the Executive Board determine the RMB (Chinese Renminbi) to be freely usable and include it in the SDR basket as a fifth currency, along with the British pound, euro, Japanese yen, and the US dollar,” said Lagarde in her statement.
 
She added that the IMF staff had found that Chinese authorities have addressed all remaining operational issues identified in an initial staff analysis submitted to the Executive Board in July.
 
In August, the People’s Bank of China (PBoC) had said that it would allow the value of the yuan to be more closely linked to the market. The reference rate for the yuan would be fixed based on the previous days movement in the spot market, the PBoC had indicated. Analysts had seen that as a move meant to appease the IMF and ensure the Yuan’s entry into the SDR basket.
 
“I support the staff’s findings. The decision, of course, on whether the RMB should be included in the SDR basket rests with the IMF’s Executive Board. I will chair a meeting of the Board to consider the issue on 30 November,” said Lagarde in her statement.
 
The SDR is an international reserve asset, created by the IMF in 1969. Its value is currently based on a basket of four key international currencies. Once included, the Yuan would become the fifth currency in the basket. SDRs can be exchanged for freely usable currencies.

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PBC Official Answered Press Question about IMF Managing Director’s Statement on SDR Review
                
               2015  11  14
Q: Mme. Christine Lagarde, Managing Director of the IMF, just issued a statement on SDR review. Can you comment on it?
 
A: The People's Bank of China welcomes the statement of Mme. Christine Lagarde, and appreciates the analysis and suggestions of the IMF staff on including the RMB into the SDR currency basket, which is as an acknowledgement of the progress in China's recent economic development, reform and opening up.
 
The inclusion of the RMB in the SDR basket would increase the representativeness and attractiveness of the SDR, and help improve the current international monetary system, which would benefit both China and the rest of the world.
 
We hope the RMB's inclusion in the SDR basket will be supported by the international community. We look forward to the scheduled Executive Board discussion on November 30 and will respect its decision. Going forward, China will continue to deepen economic reforms and promote financial opening up.

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