BEIJING (Reuters) - Chinese Premier Li Keqiang has asked the head of the International Monetary Fund to include China’s yuan currency in its special drawing rights (SDR) basket, state news agency Xinhua said.
“China will speed up the basic convertibility of yuan on the capital account and provide more facility for domestic individual cross-border investment and foreign institutional investment in China’s capital market,” Xinhua paraphrased Li as telling IMF Managing Director Christine Lagarde, in a report late on Monday.
Li added that “China hoped to, through the SDR, play an active role in the international cooperation to maintain financial stability and promote the further opening of China’s capital market and financial area”, the report said.
“China will push forward financial reform for the real economy and prevention of risk. China will develop private, small and medium banks to provide better support for small businesses,” Li was cited as saying.
China’s yuan at some point would be incorporated in the SDR currency basket, Lagarde said on Friday.
Her comments follow speculation that the IMF may decide to include the yuan in the SDR basket - currently made up of dollars, yen, pounds and euros - during a five-year review due to be conducted this year.
The first step in the review of the basket for the SDR, an international reserve asset, is an informal board meeting in May, followed by a formal review in the autumn. Any changes would come into effect in January 2016, but would require a 70 or 85 percent majority on the IMF council.
Though Beijing keeps a tight rein on the yuan’s movements and maintains strong capital controls, it is pushing for the increased use of the yuan for trade and investment.
The yuan’s inclusion could be seen as diminishing the dollar’s standing internationally.
Reporting by Ben Blanchard; Editing by Kim Coghill