IMF favorable about RMB SDR inclusion

International Monetary Fund (IMF) officials expressed support for the Chinese currency's internationalization and confidence in China's economy, pointing out structural transformation and labor productivity growth as keys to its economic growth, during the World Bank Group and IMF annual meeting in Lima.

The IMF will complete an assessment of the Chinese yuan's status as a new currency for Special Drawing Rights (SDRs) before the end of 2015, said the organization's Managing Director Christine Lagarde on Oct 9.

"The review will determine implementation from September 2016 to allow time for central banks to adjust, including their computers," said Lagarde.

In November, the IMF will decide whether to extend the current valuation of the SDR or whether to add the RMB to this basket for five years (2016-2021).

"Whether the RMB can be included in the SDR basket is an important implication concerning the status of the RMB in the global community, which will promote the wide use of the RMB in international trade, adding the RMB to foreign reserves and strengthening China's finance and economy," said Zhu Min, deputy managing director of the IMF.

The SDR, an international reserve asset created by the IMF in 1969 to supplement the existing official reserves of member countries, is a basket of key international currencies, including the euro, Japanese yen, British pound sterling, and US dollar.

The move, he added, would greatly increase the status of RMB in the international arena, allowing the voices of emerging markets to draw more attention and would advance the reform of the IMF as a more inclusive organization.

Also in Lima, Yi Gang, deputy governor of the People's Bank of China, said that China will continue to push ahead financial reforms with the hope that its currency can be included in the SDR basket later this year.

China has opened its interbank bond market and forex market to overseas financial institutions and has been promoting data transparency, following SDR requirements. The central bank has recently further freed the RMB exchange rate through changes to the central parity rate mechanism to make the exchange rate more flexible, Yi said.