DRESDEN, Germany, May 29 (Reuters) - Finance chiefs from the Group of Seven industrial nations agreed on Friday that including China’s renminbi in the International Monetary Fund’s currency basket is desirable, but a technical review must be completed first.
The inclusion of the renminbi, also known as the yuan, as part of the IMF’s unit of account would mark another stage in China’s rise as a global economic player, requiring the United States to accept a dilution of its power in international finance.
German Finance Minister Wolfgang Schaeuble, who hosted the G7 meeting in Dresden, said the finance chiefs discussed the possible inclusion of the renminbi in the basket of currencies that makes up the IMF’s Special Drawing Rights (SDR).
The SDR is a virtual currency that defines the value of IMF reserves, used for lending to countries in financial difficulty.
“We were completely agreed that it is desirable in principle, that the technical conditions must be examined, but there are no politically divergent views on this,” Schaeuble told a news conference at the end of the two-day meeting.
The renminbi is already the world’s fifth most-used trade currency. Beijing has made strides this year in introducing the infrastructure needed to float it freely on global capital markets.
Japanese Finance Minister Taro Aso said he welcomed China’s intention to reform its yuan currency and that progress on liberalising China’s capital market should pave the way for the yuan to satisfy the IMF’s criteria as global currency.
Including the yuan in the IMF basket would increase China’s influence at the Fund - an institution Washington was instrumental in designing and through which it has projected ‘soft power’ for the last 70 years.
China would be the first emerging market currency to join the basket that comprises the dollar, the euro, the yen, and the pound sterling. But Schaeuble played down the chances of China being given the green light this year.
“Whether the renminbi will be included in autumn already is a decision the IMF must make. It seems a bit optimistic to me,” Schaeuble said.
“There is still a series of technical questions to be clarified and not just technical questions. It would be wrong, precisely because we have complete agreement on the aim, to make this process harder by putting inappropriate time pressure on.” (Editing by Jeremy Gaunt)