China to cooperate with IMF in yuan's SDR review

BEIJING - China will cooperate with the International Monetary Fund (IMF) on the assessment of yuan's readiness to be included in the special drawing rights (SDR) basket of currencies, the State Administration of Foreign Exchange (SAFE) said on Wednesday.

"China will actively push for SDR entry and assist the IMF on the evaluation," SAFE's Wang Yungui told a press conference.

SDR entry is a major step in yuan internationalization and of great significance in easing financial risks, Wang said.

Created by the IMF in 1969, the SDR is an international foreign exchange reserve asset comprised of a weighted basket of four currencies -- US dollar (41.9 percent), euro (37.4 percent), British pound (11.3 percent) and Japanese yen (9.4 percent).

Allocated to IMF members on the basis of their contribution to the fund, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need.

The value of a country's total exports and imports, as well as whether a currency is fully convertible under the capital account, are taken as two key criteria for SDR entry.

The IMF reviews the currencies in the SDR basket every five years, and whether to add the yuan to the basket is a major issue for this year's assessment. At the last SDR review in 2010, the yuan met the first criterion, but was assessed as not meeting the "freely usable" criterion.

The central bank, the People's Bank of China, is coordinating the assessment.