The executive board of the International Monetary Fund (IMF) still plans to formally review the possibility of adding the Chinese currency renminbi (RMB) to its benchmark currency basket by the end of this year, senior IMF officials said here Tuesday.
The officials, who asked not to be named, made the remarks to Xinhua after some Western media reported earlier Tuesday that the IMF may delay the inclusion of the RMB in its the special drawing rights (SDR) basket till September 2016.
The international use of the RMB "has increased substantially" since the last review of the SDR basket in 2010, the IMF said in a staff report released Tuesday.
"Other currencies have not experienced substantial changes in their relative prominence, underscoring that the rise of the RMB is the most significant development in international currency use since the last review," the IMF said in the report that laid out the initial considerations for reviewing the RMB's inclusion in the SDR basket scheduled later this year.
"This notion is also supported by other contextual information such as the rising global network of RMB swap lines and the rapid growth in RMB payments from offshore clearing centers to the Mainland," the report said, adding that the growing international use and trading of the RMB are "part of a durable trend."
The international use of the RMB is vital for the IMF to decide whether the RMB is a "freely usable" currency, an important criterion for admission into the SDR. At the last IMF review in 2010, the RMB met the export criterion, but was assessed as not meeting the "freely usable" criterion.
"If the RMB 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.
The report didn't give any indications whether the RMB would be put in the SDR basket later this year, but recommended extending the current SDR basket mandate by nine months until September 2016.
The proposed extension, which will be decided by the IMF's executive board later this month, will not "in any way prejudge the timing of conclusion or outcome of the review," another senior IMF official said in a conference call with reporters on Tuesday, nothing that these two things were not related.
"This was mainly in response to feedback from SDR users" because it's not easy for them to rebalance their reserve holdings on Jan. 1, 2016, he said, adding that SDR users also need more time to rebalance their positions if a new currency is added to the basket.
The IMF's executive board will formally discuss the RMB's SDR review toward the end of the year, the official confirmed.
The IMF reviews the currencies in the SDR basket every five years, and whether to add the RMB to the basket is a major issue for this year's assessment.
The SDR basket was created in the 1960s as an international reserve asset that IMF members can claim in times of need. It currently contains only four currencies, namely the U.S. dollar, the euro, the British pound and the Japanese yen.
