The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.

A bank employee counts 100-yuan banknotes at a bank in Hangzhou, east China's Zhejiang province on December 1, 2015. The International Monetary Fund's recognition of China's currency is a step towards encouraging its global use, but banks will remain reluctant to hold yuan unless Beijing pushes deeper financial reforms, analysts say. CHINA OUT AFP PHOTO

China’s yuan index makes sense after its inclusion in IMF’s SDR

It is surely no coincidence that the People’s Bank of China (PBOC) chose to announce a yuan index versus a basket of currencies, in parallel with the bilateral dollar/yuan exchange rate, just a short time after China’s currency was invited into the IMF’s Special Drawing Rights (SDR).

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