IMF announces RMB in SDR starting on Oct 1

International Monetary Fund Managing Director Christine Lagarde (center) poses with the Chinese team at IMF on Friday after announcing the launch of the new IMF Special Drawing Right (SDR) valuation basket that includes the Chinese currency yuan for the first time. [Chen Weihua/China Daily]

Lagarde thanked the Chinese team at the IMF, including the new IMF deputy managing director, Zhang Tao.

"Inclusion of the RMB in the SDR is an important signal that China has made a lot of progress with financial reform and the RMB has become an international currency," said David Dollar, a senior fellow at the John L. Thornton China Center of the Brookings Institution in Washington.

He said in order to be a major reserve currency, China needs to continue reform, strengthening transparency and reliability of capital markets and opening up more to the global economy.

Rory MacFarquhar, a visiting fellow at the Peterson Institute for International Economic and a former senior official at the White House National Security Council, said the inclusion of the RMB in the SDR is putting new responsibility on China.

"Those basically come down to the way China thinks of its currency, thinks of its economic management as in global terms," he said.

"The decision is very good for China, IMF and international financial system," said Eswar Prasad, the Tolani Senior Professor of Trade Policy at Cornell University. The former IMF chief in China believes it will be good for pushing forward China's internal reform, especially in the financial sector.

He also believes it's good in terms of making China a stakeholder of IMF and bringing on board the emerging markets, which feel somewhat unfairly treated in the international financial governance.

On Friday, the IMF Board also decided that effective on Oct 1, the value of the SDR will be the sum of the values of the following amounts of each currency, namely US dollar, 0.58252; Euro, 0.38671; Chinese yuan, 1.0174; Japanese yen, 11.900; Pound sterling, 0.085946.

chenweihua@chinadailyusa.com