China’s RMB Embarks on New Journey Towards Global Reserve Status
(By Gao Pan and Jiang Yujuan. Xinhua News Agency, Sept. 30, 2016. Complete text:) Washington - China’s currency, the renminbi (RMB), is breaking the financial world’s ultimate glass ceiling and embarking on a new journey towards global reserve status when it formally joins the elite currency club of the International Monetary Fund (IMF) on Saturday [Oct. 1].
It is an acknowledgement of the progress China has made to get integrated into a global financial system dominated for decades by advanced economies, marking a historic milestone for China, the IMF and the international monetary system.
Break financial glass ceiling.
Christine Lagarde, Managing Director of the IMF, on Friday announced that the RMB will be considered by the international community as a "freely usable international currency" and will join the IMF’s Special Drawing Right (SDR) basket on Oct. 1, along with the US dollar, the euro, the Japanese yen and the British pound.
This is "the first time" in history that the SDR basket has expanded, Lagarde said, noting the inclusion of the RMB into the SDR basket will further diversify it and will make its composition more representative of the global currencies and the global economy.
The SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves. It can be exchanged among governments for freely usable currencies in times of need.
As the RMB meets the IMF’s standard of being "freely usable" in the global economic system, the Chinese currency will be used in the IMF’s financial operations going forward, Lagarde said.
"There’s never before been a currency of emerging markets that is being used for international transactions in the IMF to borrow and lend. This is the first time that has ever happened," Tamim ...
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|Article Title||RMB Joins SDR, Moves to Become Global Currency|
|Source||Current Digest of the Chinese Press, The, No.39, Vol.5, September 26, 2016, page(s):3-5|
|Place of Publication||Minneapolis, USA|