The International Monetary Fund’s consideration of China’s yuan for inclusion in its basket of elite currencies is on track with a decision possibly later in November, Fund spokesman Gerry Rice said.
With inclusion of the yuan in the special drawing rights (SDR) make-up a key policy goal of Beijing, Rice declined to speculate on the decision.
However, he noted that a crucial qualification – international use of the currency also called the renminbi – was progressing.
“The renminbi internationalisation continues,” Rice said on Thursday at a news briefing.
The board of the IMF is expected to discuss China’s application to join the SDR this month.
The IMF has been generally receptive to the idea that the yuan could join the US dollar, British pound, the euro and Japanese yen in the make-up of the SDR.
While not a freely traded currency, the SDR is important as an international reserve asset and, because the IMF issues its crisis loans, crucial to struggling economies such as Greece, valued in SDRs.
China, now the world’s second-largest economy, asked last year for the yuan to be added to the grouping.
Until recently the yuan’s exchangeability on international markets has been too tightly controlled by Beijing for it to fully qualify.
On August 4 the IMF said the currency fell short of meeting all the standards for inclusion, particularly on being “freely usable” in international finance.
However, China’s economic slowdown has complicated Beijing’s efforts to widen its use and movements in its valuation, especially because the IMF reviews the SDR basket only every five years, and the deadline for the current review is the end of this year.
In a move seen as trying to accommodate China’s push for inclusion, on August 19 the Fund announced that it had extended by nine months the implementation of the revision, giving more time for adjustment to the potential inclusion of the yuan.
If a decision to include the yuan is made this month, that actual inclusion could take place as late as September 30, 2016, giving Beijing more time to prepare.
“The extension would also allow users sufficient lead time to adjust in the event that a decision were to be taken to add a new currency to the SDR basket,” the IMF said at the time.