Chinese yuan’s entry into IMF’s Special Drawing Rights basket to usher in deeper reforms: PBOC
Official at mainland’s central bank admits renminbi still lags behind other major currencies in terms of capital account convertibility and says Beijing must open up financial markets more
A Chinese central bank official says the inclusion of the yuan into the International Monetary Fund's (IMF) global reserve currencies basket is the starting point for deeper financial reforms, which include a greater liberalisation of its capital account.
Xing Yujing, director general of the No 2 monetary policy department of the People's Bank of China - the mainland’s central bank - told a news conference on Friday that the yuan's admission into the IMF's Special Drawing Rights basket would help improve price discoverability for the currency.
However, she noted the yuan lagged behind other major currencies in terms of convertibility on the capital account and that China still needed to open up its financial markets further.
While the yuan is already convertible under China's current account, the broadest measure of trade in goods and services, the capital account, which covers portfolio investment and borrowing, is still subject to restrictions as Beijing worries about abrupt capital flight and hot-money inflows.
“We will continue to push forward yuan convertibility on the capital account in a safe and orderly way, on condition that risks are under control,” she said.
The IMF admitted China's yuan into its benchmark reserve currency basket on Monday, which was a victory for Beijing's campaign for recognition as a global economic power.