China’s yuan ‘not ready’ to join IMF basket of currencies, says US
Treasury Secretary Jack Lew also softens stance on new China-led development bank, saying he was ready to welcome new lender if it adopts high standards of governance
The United States feels China’s yuan does not yet meet the standards for inclusion in the International Monetary Fund’s basket of global currencies, Treasury Secretary Jack Lew said on Tuesday.
He also said Washington was “ready to welcome” the China-led Asian Infrastructure Investment Bank, backing off from tougher early resistance to the new development institution.
The yuan’s inclusion in the basket, which defines the value of the IMF’s reserve assets, would add to China’s global status while encouraging more central banks to hold the currency.
Currently the basket includes the dollar, the yen, the euro and the pound, and the IMF is reviewing the composition of the basket this year.
Officials at the international lender look for a currency to be used heavily in international trade as well as freely convertible. Lew said that China had more work to do.
“While further liberalisation and reform are needed for the [yuan] to meet this standard, we encourage the process of completing these necessary reforms,” Lew said in a speech at the Asia Society Northern California in San Francisco.
The yuan is already the world’s fifth most-used currency in trade and Beijing has made almost weekly strides this year in introducing the infrastructure needed to float it freely on global capital markets.
