IMF approves China's yuan as elite reserve currency

The International Monetary Fund welcomed China's yuan into its elite reserve currency basket Nov. 30, recognizing the ascendance of the Asian power in the global economy.

The yuan, also known as the renminbi, will join the US dollar, euro, Japanese yen and British pound next year in the basket of currencies the IMF uses as an international reserve asset.
 
IMF Managing Director Christine Lagarde called the decision "an important milestone in the integration of the Chinese economy into the global financial system."  

"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 added.
 
The decision by the IMF executive board solidifies China's ambition to see the government-controlled yuan achieve global status as one of the world's top currencies alongside the United States, Europe and Japan.
 
China, the world's second-largest economy, asked last year for the yuan to be added to the Fund's Special Drawing Rights basket.
 
But, while already meeting the SDR criteria for being widely used, as recently as August the Fund considered the currency too tightly controlled to qualify.    

However, IMF staff experts in early November said that Beijing had taken the steps necessary for the yuan to be called "freely usable", opening the way for Monday's decision.
 
Lagarde said the yuan's inclusion in the basket was expected to help China open up further to the world economy.
   
"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....