IMF Report: No SDR Inclusion for Chinese Yuan

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.


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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AlienEyes · Aug 4, 2015 - 6:57pm


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


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


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


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).

usk · Aug 5, 2015 - 11:22am

Look at the miners today

If we make a new low in GDX today, that a clear sign that, again, a major dump is about to happen in the coming 24 hours, probably with the job release. Let's see if they can break the supports tomorrow.

BOJ is in full intervention mode today. BIS will probably follow. Hope to get a nice buying op tomorrow as I have received some fresh cash to invest and Euro is tumbling fast...

Again: you don't short miners at this level without a clear knowledge of a coming intervention. Shorting a penny stock used to be a huge risk. not anymore in these "markets" with unlimited leverage for unlimited creation of phantom shares.

Angry Chef · Aug 5, 2015 - 11:24am

Someone on this site referenced the above site awhile back. I've been checking it ever since. Interesting stuff for sure. What a tangled web we weave....

lund175 · Aug 5, 2015 - 11:59am

Forget miner stocks long term as they will be nationalized

Along with everything else in the US as per executive ord. 13603

(d) The Secretary of Commerce, in cooperation with the Secretary of Defense, the Secretary of Homeland Security, and other agencies, shall:

(1) analyze potential effects of national emergencies on actual production capability, taking into account the entire production system, including shortages of resources, and develop recommended preparedness measures to strengthen capabilities for production increases in national emergencies; and

lund175 · Aug 5, 2015 - 12:05pm

But even if they are "nationalized"

Shareholders will still likely have to be compensated in some amount of worthless fiat. 

Markedtofuture · Aug 5, 2015 - 12:42pm

Citigroup’s Unchecked Crime Wave

Citigroup’s Unchecked Crime Wave Proves that America Is Headed in the Wrong Direction

By Pam Martens and Russ Martens: August 5, 2015

Citigroup, the bank that played a central role in bringing America to its knees in 2008; received the largest taxpayer bailout in the history of finance to resuscitate its insolvent carcass; pleaded guilty to a felony count of rigging foreign currency trading in May and was put on a three year probation – is now under a string of criminal and civil investigations.

On August 3, Citigroup filed its quarterly report (10Q) with the Securities and Exchange Commission (SEC). Instead of reporting a pristine slate free of transgressions as one would expect from a felon on probation, Citigroup reported that it had settled allegations of money laundering with the Federal Deposit Insurance Corporation and the Commissioner of the California Department of Business Oversight involving its Banamex USA unit. The bank was, as typical, able to pay a penalty of $140 million and avoid an admission of guilt.

What Citigroup did not report on its 10Q is that it is also under another criminal money laundering probe by the Justice Department for its Mexican-based Banamex unit, according to a Bloomberg Business report. On July 24, Bloomberg reported the following:

KeynesianKryptonite · Aug 5, 2015 - 12:42pm

Take heart, inflection ahead . . .

The graveyard of finance is littered with examples of companies that squandered their futures on flawed actions and criminal decisions that were largely driven by greed, and most often guided by an overwhelming sense of hubristic confidence in their own ethnocentric interpretation of reality.

The IMF, a purely US controlled organization, and an increasingly crony and incompetent one at that; is proving to be no different in its decision to delay China’s inclusion in the SDR until 2016 than recent examples from history . . . Enron, MF Global, Apple (?).

If one were able to peer into the future and foresee a moment in time before careless decisions, “group-think” and reckless bets made by impetuous Kidiots were consumated and ill fated consequences realized; just like the Titanic they would see these moments when they chose to put greater faith in their own superiority and invincibility and press full speed ahead while ignoring subtle warnings of great danger, were usually met with tragic results hidden mostly below the surface.

China’s Silk Road strategy, and associated set of trade and infrastructure agreements is an iceberg stretching from Eurasia to Europe, and having huge consequences, momentum and commitment from more than 120 developed and developing countries.

Which would you rather prefer at this historical juncture, a soothing quartet playing "Nearer, My God, to Thee," or a secure berth aboard the PM lifeboat? 

SamSchlepps · Aug 5, 2015 - 3:56pm

@TF: Isn't it more negotiation, not refusal - asking for time

Please review this post - perhaps I'm missing something. I posted same last night after your comment. Went to IMF site - could not find 'report' Everything on the web seems to reference the above article.

As per the article: "... implementation of any formal decision to add the yuan to a basket of currencies comprising dollars, euros, pounds and yen should be delayed ... The proposed extension ... would not in any way prejudge the timing of conclusion or outcome of the review.

Isn't it somebody asking for a little more time - instead of usual January implementation asking for delay to September. Is that strength or weaknesses - ie - given the formal decision - lets push out implementation to September.

Comes across to me as negotiating rather than refusal to inclusion as your headline says. Comes across to me as saying inclusion is forgone conclusion so we'll back if you delay to September.

What am I reading incorrectly?

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