The Yuan Still Has Some Growing Up to Do

摘要

It took half a decade of incremental policy changes plus a couple of years of lobbying, but China finally overcame doubts and objections on Nov. 30 to secure reserve status for its currency. Officially referred to as the renminbi, or "people's currency," the yuan will join the dollar, euro, pound, and yen in the International Monetary Fund's global currency basket, effective on Oct. l, 2016. In anointing the yuan as a component of the fund's special drawing rights (SDR)-a kind of overdraft line of credit for IMF members-the organization was recognizing "the progress that the Chinese authorities have made in the past years in reforming China's monetary and financial systems," said IMF Managing Director Christine Lagarde. Beyond the prestige factor, the IMF move will do little for the yuan, boosting demand only modestly in the near term as central banks and sovereign wealth funds rebalance their holdings to reflect the composition of the SDR basket.