Moves are afoot to include the Chinese renminbi, and
possibly other currencies, in the basket used to calculate the
IMFs accounting unit, its Special Drawing Rights (SDRs).
The move would have big implications for the global
ASEAN+3 finance ministers, meeting in Hanoi yesterday, were
briefed by French finance minister Christine Lagarde on an IMF
study, drawn up at the request of the G20 under Frances
chairmanship, on enlarging the range of currencies in the SDR
Indonesian finance minister Agus Martowardojo, a co-chair of
the meeting, told Emerging Markets yesterday:
Only strong currencies are included in the SDR
dollar, euro, yen and the pound and in the G20 forum we
have discussed the possibility of adding more
He added that some proposals were likely to be made at the
G20 finance ministers meeting in November.
The debate is centred on the Chinese yuan more than other
currencies. The IMF board last year advised against including
the yuan in the SDR basket, but the debate has been reopened in
the G20, IMF deputy managing director Naoyuki Shinohara told
The US sees inclusion of the yuan in the SDR basket as a way
to make the Chinese currency more sensitive to market signals,
sources said but China does not want to be
trapped into having its currency forcibly
appreciated via SDR inclusion.
Lagarde told Emerging Markets: I think the study
underway, which is conducted by the IMF, is about what are the
criteria and conditions to enlarge the composition of the SDR
Clearly the prime candidate is more likely to be the
renminbi than any other currency. But I think that the study is
an issue of principle that they are reviewing at the
moment, she added.
Asked at a briefing whether the ASEAN+3 ministers had
discussed the need to have trade transactions among Asian
countries settled in local currencies, Agus said this hinges
upon the outcome of discussions within the G20 on monetary
Iwan Aziz, head of the ADBs Office of Regional
Economic Integration told Emerging Markets that
Malaysia is pushing to have the yuan used as a currency for
trade settlements. It is the only south east Asian country that
accepts such settlements and is anxious to see others follow
But the prime reason behind the moves to have the yuan
included as a component of the SDR is to make the yuan
more commercial and its exchange rate more amenable to
market signals, he said.
ADB chief economist Changyong Rhee told Emerging
Markets: This is the hot topic the French presidency
would like to push forward. My understanding is that there is a
common understanding to make the yuan an international currency
in the sense that it can belong to the SDR basket.
He added I think the Chinese government doesnt
mind making the yuan compatible [with the SDR]. But whether
they [agree to] the preconditions for the SDR capital
account liberalisation or not thats the issue.
Western countries say this should be a precondition,
but my understanding is that the Chinese are saying that it
shouldnt be. Its premature to say whether its
feasible [for this to happen] by November or not. I dont
expect itll happen overnight.
Theoretically, inclusion of the yuan in the SDR basket would
qualify a Chinese national to be nominated as a candidate for
the office of IMF managing director, should that position be
opened up to non-European candidates, Aziz confirmed.