IMF Report: No SDR Inclusion for Chinese Yuan

17
Tue, Aug 4, 2015 - 6:52pm

Just minutes ago, Reuters reported that an IMF staff report has concluded that the Chinese yuan is not yet ready for inclusion in the basket of fiat currencies that make up the IMF's Special Drawing Rights (SDR). Hmmm. I wonder how that will go over in Beijing?

It's important to note, this is NOT a formal decision by the IMF. The formal announcement is still expected sometime later this month. Instead, this is an IMF staff report with the conclusion that though the Chinese have made "progress", the yuan is still not ready for primetime as a "freely usable currency". Gosh, I wonder if the Chinese politburo and the 32 countries with which China has direct currency swaps think of that? I also can't help but wonder why a currency with "usability" issues would play such a major role in important new institutions like the Asia Infrastructure Investment Bank (AIIB) and the New Development Bank (formerly BRICS Development Bank)?

Oh, well. Maybe when China gets around to updating their gold reserves again...perhaps as soon as later this month...they'll divulge something a little closer to the truth? Maybe, too, they'll simply turn the tables on the IMF and tell them to go pound sand, instead? We'll see. All I know is that a lot of supposedly smart people with "insider level" information were convinced that China was only accumulating gold in order to attain this SDR inclusion. With SDR inclusion now looking to be postponed for at least another year, what happens next is anyone's guess.

TF

https://www.reuters.com/article/2015/08/04/us-imf-currency-china-idUSKCN...

IMF review recommends delaying currency basket adoption of yuan

Tue Aug 4, 2015 6:18pm EDT

WASHINGTON (Reuters) - 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.

European members of the Group of Seven major industrialized economies - Germany, Britain, France and Italy - favor adding the yuan to the basket this year. Japan, like the United States, is more cautious, officials have said.

The yuan has made huge strides since Beijing's last push for more formal international recognition of the currency, as global financial leaders were struggling to deal with the fallout of the sub-prime and banking crisis.

The IMF staff report recognized progress made by Beijing, noting that it was already the fifth most-used currency for international trade.

Chinese Premier Li Keqiang in March asked IMF Managing Director Christine Lagarde to push for inclusion, saying Beijing would speed up the convertibility of the yuan on the capital account and open domestic individual cross-border investment and foreign institutional investment in China's capital market.

Earlier this year, frustrated by the refusal of the U.S. Congress to pass reforms to increase the voting rights of emerging markets in the IMF, Beijing announced it would set up its own investment bank, the Asian Infrastructure Investment Bank.

Despite pressure from Washington, which along with Tokyo, has declined to join AIIB, most U.S. allies in Europe have signed up for the Chinese-led initiative, seen as a rival to the World Bank and Japan-based Asian Development Bank.

(In fifth paragraph, this story corrects to show that IMF board will make the decision on whether yuan should be "freely usable," not that that the yuan did not meet the criteria)

(Reporting by David Chance and Krista Hughes; Editing by Paul Simao)

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  17 Comments

AlienEyes
Aug 4, 2015 - 6:57pm

#1

Ace !

proformatrillionaire
Aug 4, 2015 - 7:08pm

I will take 2nd

Oh well

cashonly
Aug 4, 2015 - 7:20pm

SDR inclusion? I didn't think so

Correct me if I am wrong but doesn't China/Asia already have all the financial doppleganger entities in place to challenge the 'establishment'? Just a matter of going live - now back that system with some yummy gold and turns to 'going hot'.

Didn't China recently announce that its 'CIPS' (SWIFT) payment system would be reduced to only trade and payments with China? Was this a submissive move to enhance its odds with SDR inclusion? Now what?

Does all this really F#@king matter? He who has the gold makes the rules.

Just a matter of time as productivity will win out against over-indebted-super-consumerism.

4 oz
Aug 4, 2015 - 7:37pm

hmmm... Pass the Popcorn.

So, this is the West's move?

Havenstein
Aug 4, 2015 - 7:37pm

Figures

One more sure-fire event that didn't.

So, dollar up gold down Wed?

- H.

Angry Chef
Aug 4, 2015 - 7:42pm

China SDR

Isn't this what Jim Willie has been saying. That China doesn't want to be in the SDR. They want their own Gold ( and Silver ) backed trade note ? I interpret this as a message to China and Russia. No Chinks nor Ruskies allowed in the club. Lets have at it ! Afterall, these people consider everyone sub humans. We're simply not worthy except for cannon fauder.

tyberious
Aug 4, 2015 - 8:01pm

IMF

So much for the China is in collusion with WCB theory!

Mr. Fix
Aug 4, 2015 - 8:07pm

Of course it won't be allowed…

The Chinese actually have a viable plan to make their money worth something by backing it with gold. This would completely undermine the western banking Carteles paper Ponzi scheme, something that will not be allowed. World War III appears to be largely an economic/banking war, and those on the east are actually holding all the aces.

As an alternative to western banking, China and Russia (along with an ever-growing alliance) will eventually destroy Western civilizations ability to do anything. In the big picture, this news is of no relevance. It only points to Western banking's last gasp of legitimacy, and only hope of maintaining the illusion a little bit longer.

Right now, the IMF is completely devoid of any real wealth, but because it has complete control over those nations already in the basket, (all taking turns running the printing presses at full throttle) it can control and manage the economic implosion underway. Bringing in a new player that is not under their control creates a wild card that might put a snag in their genocidal agenda. Interference is not acceptable.

If the world is going to be rebuilt, it's going to have to start in the east, and work it's way outward. By then, the west will have already played out its scorched-earth policy, with no one left standing.

The only reason China does not have an "acceptable" currency, is because they do not have enough debt. Western banking runs entirely on debt, it's a prerequisite to get into the club. Countries that produce goods and services that people are actually willing to pay for are not welcome in the Ponzi club.

All China and its allies have to do is to refuse to except payment in dollars and other western currencies. Then it's game over, checkmate. That's when paper Ponzi coupons become worthless overnight.

Since that's the plan, I see everything is moving along exactly as intended.

canary
Aug 4, 2015 - 8:55pm

What if China start selling US treasuries?

Just a little more than what we've seen lately.

AlienEyes
Aug 5, 2015 - 1:33am

canary

If China starts selling US treasuries like they are turning into dirt, guess what? They'll turn into dirt. The Chins aren't that stupid. Actually, just the opposite. They will sell what meets their needs and what they can sell without paying a price to "the angry birds" (US Bald Eagles).

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