Dec 01, 2015 (LBO) – The International Monetary Fund has included the Chinese yuan as a fifth currency in their basket of currencies that make up the Special Drawing Rights (SDR).
Effective from October 1, 2016 the Chinese Yuan is determined to be a freely usable currency along with the US dollar, the euro, the Japanese yen and the British pound.
“The decision is an important milestone in the integration of the Chinese economy into the global financial system,” Christine Lagarde, managing director of the IMF, said.
“It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems,” she said.
“The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy.” she said.
The SDR interest rate will continue to be determined as a weighted average of the interest rates on short-term financial instruments in the markets of the currencies in the SDR basket.
The value of the SDR will be based on a weighted average of the values of the basket of currencies comprising the US dollar, euro, the Chinese renminbi, Japanese yen, and British pound.
China’s currency is officially called the ‘renminbi’ but the yuan is the unit of account.