Macroscope | Why China's yuan deserves SDR recognition by the IMF
China's pursuit of a more sustainable growth model through serious reforms indicates its political will to deliver greater convertibility
Since Deng Xiaoping embarked on market reforms in the late 1970s, China has evolved from a poor, closed economy to become first the factory of the world and now a country on the cusp of significant economic opening.
This begs the question of how its currency will integrate into the global financial system.
It is a matter of when, not if, the yuan will be included in the International Monetary Fund's special drawing rights currency basket. With the five-yearly SDR review due later this year, now is a good time.
The yuan's inclusion would cement its rising reserve-currency status and accelerate investment in the currency. To qualify, it must be "freely usable", although not necessarily "fully convertible".
The Japanese yen became fully convertible only in 1980 - two years after the IMF determined it to be freely usable.
Sceptics may focus on how far China still has to travel, but the IMF should instead look at how far it has come.