The International Monetary Fund should put off any move to add the yuan to its Special Drawing Rights currency basket until September 2016, an IMF staff report said, a move that would effectively end the Chinese currency’s chances of an early inclusion. The report, published on Tuesday, comes after Beijing launched a major diplomatic push for the yuan’s inclusion in the IMF basket as part of its long-term strategic goal of reducing dependence on the dollar.
The report said the implementation of any formal decision to add the yuan to a basket of currencies comprising dollars, euros, pounds and yen should be delayed so as not to disrupt financial market trading on the first day of 2016. “The proposed extension, which will be decided by the Executive Board later this month, would not in any way prejudge the timing of conclusion or outcome of the review,” said Siddharth Tiwari, director of the IMF’s strategy, policy and review department.
It said that the yuan, also known as the renminbi, met the requirements as a significant currency in terms of international trade. The board would judge if the yuan meets criteria that it should be “freely usable.” “If the RMB (renminbi) were determined to be a freely usable currency, it would play a more central role in the Fund’s financial operations going forward, and it would qualify for inclusion in the SDR basket,” the report said.