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在线翻译:
szdaily -> Opinion -> 
RMB quickens global pace
    2016-10-10  08:53    Shenzhen Daily

    Winton Dong

    dht620@sina.com

    ON Oct. 1 this year, the Chinese currency, or the yuan, officially joined the Special Drawing Right (SDR) currency basket, which was fully endorsed by the International Monetary Fund (IMF), a 188-member multilateral banking organization.

    In accordance with the joining, the yuan has been included in the SDR basket as a fifth reserve currency, together with the four original currencies, namely, the U.S. dollar, the euro, the British pound and the Japanese yen. The Chinese currency now has a 10.92 percent weighting in the SDR basket. The U.S dollar ranks first, accounting for 41.73 percent of the total SDR basket.

    Actually, the IMF announced on Nov. 30 last year that the RMB was eligible for joining its SDR currency basket. According to Christine Lagarde, managing director of the IMF, the RMB’s inclusion into the SDR currency basket was an important milestone in the integration of the Chinese economy into the global financial system. It is also a big step forward in the internationalization of the RMB and will pave the way for the RMB’s free convertibility and the emergence of RMB-denominated assets comprising a significant share of global reserves.

    “The launch date for the new SDR on Oct. 1 this year, 10 months after our announcement, is to provide sufficient lead time for the IMF, its members and other SDR users to adjust to these changes,” Lagarde explained.

    Nicholas Lardy, a senior researcher with the Washington-based Peterson Institute of International Economy, told Xinhua that the yuan’s inclusion in the SDR basket reflected IMF’s acknowledgement of China’s rising heft in the global economy.

    “With China becoming the world’s second-largest economy, the yuan is widely used across the globe. So it is the right time to add the yuan to the SDR basket. Such an action will also make the IMF more diversified and more representative of the global financial market,” he said.

    Frankly speaking, an international currency should serve both as a reserve currency and as a clearing or settlement currency.

    Being included in the SDR basket as a reserve currency, China is trying its best to improve the global settlement function of its currency. On Sept. 20 this year, Premier Li Keqiang announced that China had decided to designate a domestic bank for the RMB clearing business in New York. Li made the statement while speaking to the Economic Club of New York at the Waldorf Astoria Hotel. Participants in the club meeting included former U.S. Secretary of State Henry Kissinger, former New York Mayor Michael Bloomberg, former U.S. Treasury Secretary Henry Paulson, and president of Columbia University Lee Bollinger.

    Shortly after Premier Li’s announcement, the nation’s central bank, the People’s Bank of China, posted online that Bank of China had been authorized as the RMB clearing bank in the United States.

    

    According to the Society for Worldwide Interbank Financial Telecommunication (SWIFT) statistics, Hong Kong is now the biggest offshore RMB clearing center, followed by London, Singapore, Taiwan and New York. In December 2003, Bank of China Hong Kong became the first offshore RMB clearing bank. With the establishment of the New York RMB clearing bank this year, China has already set up 21 RMB clearing banks in Asia, Europe, North America, South America, Africa and Australia during the past 13 years, thus forming a basic network for the global settlement of the RMB.

    The establishment of clearing banks all over the world will surely push the internationalization of the RMB forward. Such a strategic action will not only cut exchange rate risk, but also lower transaction costs for trade and investment, since bilateral trade with China can now be transacted directly without reference to a third-party currency.

    (The author is the editor-in-chief of the Shenzhen Daily and guest professor of Shenzhen University with a Ph.D. from the Journalism and Communication School of Wuhan University.)

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