Who: China’s Yuan (Chinese Renminbi (RMB))
What: IMF approved it as Elite Reserve Currency
When: 30 November 2015
International Monetary Fund (IMF) on 30 November 2015 included China’s Yuan into its elite reserve currency basket. Yuan’s entry into the basket takes effect from 1 October 2016.
Yuan also known as the Chinese Renminbi (RMB) was included in the basket after it met the existing criteria for its inclusion. The action was taken after the executive board at IMF completed the regular five-yearly review of the basket of currencies that make up the Special Drawing Right (SDR).
Effect/Benefits of this inclusion
• Yuan will be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the US Dollar, Euro, Japanese Yen and British Pound.
• Launching the new SDR basket on 1 October 2016 will provide sufficient lead time for the Fund, its members and other SDR users to adjust to these changes.
• 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.
IMF Managing Director Christine Lagarde called the decision an important milestone in the integration of the Chinese economy into the global financial system.
The decision is also recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems.