New | More financial reforms in store after IMF verdict, PBOC deputy governor pledges

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PBOC said it remains important to reinforce the yuan’s inclusion in the IMF reserve currency basket

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The International Monetary Fund on November 30 announced it is adding China's yuan to the currencies that the Washington-based crisis lender uses as a measure of value, alongside the dollar, euro, yen and pound sterling. Photo: EPA

Jing Yang

Published: 2:15pm, 1 Dec 2015Updated: 4:22pm, 1 Dec 2015

China will press ahead with financial and capital account reforms after the yuan’s inclusion in an elite currency club held by the International Monetary Fund, People’s Bank of China deputy governer Yi Gang has pledged.

“The [Special Drawing Rights] basket is reviewed every five years. Any currency can be included when criteria are met. Likewise, it can also be excluded when the conditions are no longer met,” Yi said in a press briefing on Tuesday morning.

The IMF approved the yuan, also known as renminbi, to be the fifth currency in the SDR basket, a quasi-currency that functions as an account unit of the IMF, as well as claims and denomination of IMF credits to member countries.

The verdict, which gave the yuan a heavier weighting than that of the Japanese yen and British pound, was the result of years of effort by the mainland central bank to steer financial reforms, including interest rate liberalisation, deregulation and opening-up in the domestic equity, bond and foreign exchange markets, and foreign exchange rate fixing.

“We have to bear in mind that we need to keep reforming and opening up, so the yuan’s status in the SDR basket can be reinforced,” Yi said.

“We will do more work to complete the foreign exchange mechanism... and increase product offerings in the capital market, providing more hedging tools to make our markets deeper and broader,” he added.

The yuan depreciated in the offshore market on the heels of the decision, as traders bet that the PBOC will dial down intervention and let the currency flow more freely.