Washington: International Monetary Fund (IMF) managing director Christine Lagarde is calling the inclusion of China’s renminbi as the fifth currency in an elite group of the world’s reserve currencies an “important and historic milestone” for the international financial system.
Lagarde said the expansion of the IMF’s key currencies to include the Chinese renminbi was a recognition of the progress China has made in reforming its monetary and financial systems.
The yuan yesterday joined the US dollar, the euro, the yen and British pound in the IMF’s special drawing rights (SDR) basket, which determines currencies that countries can receive as part of IMF loans. It marks the first time a new currency has been added since the euro was launched in 1999.
The IMF added the yuan on the same day that the Communist Party celebrates the founding of the People’s Republic of China in 1949.
“The inclusion into the SDR is a milestone in the internationalisation of the renminbi, and is an affirmation of the success of China’s economic development and results of the reform and opening up of the financial sector,” the People’s Bank of China said.
In her comments, Lagarde said China’s inclusion acknowledged the advances China has made “in liberalising and improving the infrastructure of its financial markets. The continuation and deepening of these efforts, with appropriate safeguards, will bring a more robust international and financial system, which in turn will support the growth and stability of China and the global economy.”