China joins the ‘elite cur­rency’ club

Daily Mail - - Front Page - By Hugo Dun­can Economics Cor­re­spon­dent

THE Chi­nese yuan was last night added to a bas­ket of elite cur­ren­cies, un­der­lin­ing the coun­try’s emer­gence as a global eco­nomic su­per­power.

The In­ter­na­tional Mone­tary Fund said that the yuan would join the US dol­lar, the Bri­tish pound, the euro and Ja­pan’s yen in its exclusive club of re­serve cur­ren­cies.

The IMF’s man­ag­ing di­rec­tor Chris­tine La­garde said it was ‘an im­por­tant mile­stone in the in­te­gra­tion of the Chi­nese econ­omy into the global fi­nan­cial sys­tem’.

Re­serve cur­ren­cies are held by cen­tral banks and gov­ern­ments as a buf­fer against crises. An­a­lysts said the el­e­va­tion of the yuan, or ren­minbi as it is also known, is a vic­tory for the com­mu­nist govern­ment in Bei- jing and would boost the cred­i­bil­ity of the cur­rency.

Pro­fes­sor Kamel Mel­lahi, an ex­pert on China at War­wick Busi­ness School, said: ‘China has lob­bied ex­tremely hard to get the yuan added.’

He called the move ‘a big achieve­ment for the Chi­nese govern­ment’ and a vote of con­fi­dence in its eco­nomic and fi­nan­cial re­forms.

It is thought the IMF de­ci­sion was in part de­signed to en­cour­age stronger re­forms.

China is the world’s sec­ond big­gest econ­omy be­hind the US. Bei­jing will hope ap­proval for the yuan can boost de­mand – and un­der­mine the dom­i­nance of the dol­lar.

City Fo­cus – Page 65

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