A vendor holds Chinese Yuan notes at a market in Beijing, August 12, 2015. Reuters/Jason Lee
The International Monetary Fund admitted China’s yuan into its benchmark currency basket on Monday, as expected, in a victory for Beijing’s campaign for recognition as a global economic power.
The decision to add the yuan, also known as the renminbi, to the Special Drawing Rights (SDR) basket alongside the dollar, euro, pound sterling and yen, is an important milestone in China’s integration into global finances and a nod to the progress it has made with reforms.
To meet the IMF’s criteria, Beijing has undertaken a flurry of reforms in recent months, including better access for foreigners to Chinese currency markets, more frequent debt issuance and expanded yuan trading hours.
IMF chief Christine Lagarde, who along with in-house experts has previously backed the inclusion, made it clear she did not expect Beijing to stop there.
“The renminbi’s inclusion in the SDR is a clear indication of the reforms that have been implemented and will continue to be implemented,” she told reporters.
The People’s Bank of China said the move, which was backed by countries including the United States and Britain, showed the international community expected China to play a bigger role in the world economy.
“Going forward, China will continue to deepen and accelerate economic reforms and financial opening up, and contribute to promoting world economic growth, safeguarding financial stability and improving global economic governance,” it said in a statement.