IMF looks to ex­pand Spe­cial Draw­ing Rights

China Daily (USA) - - G20 2016 CHINA - By LI XIANG in Hangzhou lix­i­ang@chi­nadaily.com.cn

The In­ter­na­tional Mon­e­tary Fund is ex­plor­ing ways to broaden the use of its Spe­cial Draw­ing Rights af­ter the lead­ers of the G20 reached a con­sen­sus on the mat­ter at the G20 Sum­mit in Hangzhou to en­hance the re­silience of the in­ter­na­tional fi­nan­cial sys­tem, IMF chief Chris­tine La­garde said onMon­day.

“The IMF was re­ally en­cour­aged by the de­ter­mi­na­tion of China to use the SDR as a yard­stick to mea­sure re­serves and as a cur­rency for bond is­suance,” La­garde told re­porters at a news con­fer­ence af­ter the con­clu­sion of the sum­mit.

The call for greater use of SDR, a syn­thetic re­serve cur­rency ad­min­is­trated by the IMF, has been strongly backed by China as the coun­try has been work­ing to lift the global pro­file of its cur­rency. The yuan will be of­fi­cially in­cluded in the IMF’s cur­rency bas­ket on Oct 1.

La­garde vowed that the IMF will con­tinue to ex­pand the rep­re­sen­ta­tion of emerg­ing and de­vel­op­ing economies in the or­ga­ni­za­tion as it needs to serve the en­tire mem­ber­ship.

The IMF chief also re­it­er­ated that theChi­nese cur­rency meets the cri­te­ria for the in­clu­sion in the SDR as the Chi­nese mon­e­tary au­thor­ity has made “con­struc­tive progress” by mak­ing its mon­e­tary pol­icy more mar­ket-de­ter­mined.

Ex­perts said that the ex­pan­sion of the use of the SDR will help im­prove the sta­bil­ity of the global fi­nan­cial sys­tem and the in­clu­sion of the Chi­nese cur­rency will in turn em­power the in­flu­ence of the SDR in in­ter­na­tional mar­kets.

“The yuan’s in­clu­sion in the SDR will, to some ex­tent, in­crease the in­flu­ence of the SDR and en­able it to play a greater role in the in­ter­na­tional fi­nan­cial mar­kets,” said E Zhi­huan, an aca­demic com­mit­tee mem­ber at the In­ter­na­tional Mon­e­tary In­sti­tute of Ren­min Uni­ver­sity of China.

The World Bank is­sued a land­mark bond de­nom­i­nated in the IMF’s SDRs in the Chi­nese in­ter­bank mar­ket last week.

World Bank Pres­i­dent Jim Yong Kim said ear­lier that is­suance of SDR bonds in China would sup­port the G20’s ob­jec­tive of ex­pand­ing the use of the SDR, which has been listed as one of the G20’s key fi­nan­cial tasks.

At Mon­day’s news con­fer­ence, La­garde also said that the G20 lead­ers have en­dorsed sev­eral ini­tia­tives to sup­port sta­bil­ity and re­silience of the in­ter­na­tional fi­nan­cial ar­chi­tec­ture, which in­cluded the sup­port for fur­ther strength­en­ing of the global fi­nan­cial safety net with an ad­e­quately fi­nanced IMF equipped with a more ef­fec­tive tool kit.

“Global fi­nan­cial gov­er­nance has been a big topic. Af­ter the Jan­uary surge in mar­ket volatil­ity, co­op­er­a­tion be­tween coun­tries has im­proved greatly and the G20 has been a suitable venue to ce­ment the ties in that re­gard,” saidHongHao, chief strate­gist at BOCOM In­ter­na­tional Hold­ings in Hong Kong. Chen Yingqun con­trib­uted to this story.

news con­fer­ence at the G20 Sum­mit news cen­ter on Mon­day.

WANG ZHUANGFEI / CHINA DAILY

In­ter­na­tional Mon­e­tary Fund Man­ag­ing Di­rec­tor Chris­tine La­garde walks to the podium be­fore a

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