The International Monetary Fund (IMF) has officially confirmed that it is ready to include the Chinese yuan in its basket of reserve currencies (on their basis, the fund forms its own unit of account - the so-called special drawing rights).
This year, the yuan ranked fourth in the ranking of the most commonly used world currencies in international settlements, surpassing the Japanese yen for the first time in history.
Valentin Katasonov
I don’t really understand why it is fundamentally important for China to have the status of the yuan as a reserve currency. After all, if China is going to compete with the US dollar, then this is a restructuring of not only the economic, but also the political system. In fact, Beijing must agree that the country will undergo de-industrialization, because the reserve currency means that the country is sacrificing its real economy. Specialists understand this, because the national monetary unit cannot simultaneously serve the domestic economy and the world one, one cannot sit on two chairs.
I see only one reason for the Chinese - simply to increase their authority in the IMF. This authority will allow them to finally get the United States to vote on the 2010 decision, which was adopted by the IMF's board of directors. Then they voted for the 14th adjustment of quotas. The 14th adjustment of quotas provided for: a) increasing the share of China and many other countries in the periphery of world capitalism in the capital and votes of the IMF fund; b) provided for the doubling of the fund's capital; c) provided for a discussion of the issue of revising the formula itself so that it more fairly and adequately reflects the role and share of developing countries in the world economy and, accordingly, their share in the votes and in the capital of the IMF would increase. And for five years now, the United States has actually been blocking this decision. They are blocking it because they refuse to ratify the 14th adjustment of quotas.
It is clear that if the yuan acquires the status of a reserve currency, this is an additional argument in favor of increasing China's share in both capital and votes. This is the only rational argument in favor of China's desire to obtain status for its currency.
Mikhail Delyagin
The world's reserve currency is one, it is called the dollar. The basket in question is a basket of currencies, on the basis of which the so-called special drawing rights (or SDRs) are created, this is actually the monetary unit of the IMF. The inclusion of the yuan in these currencies (dollar, pound, yen, euro), firstly, will increase its international reputation. Secondly, it will contribute to the inflow into it - there will be more purchases of the yuan, and, accordingly, its some strengthening.
Of course, a large appreciation of the yuan could be bad for the Chinese economy. But I think that the National Bank of China will be able to counteract this trend, and the strengthening will not be very strong.
Kirill Myamlin
The introduction of additional currencies in international settlements is positive, because depending on one currency is a vice, the fruits of which we are now reaping.
Of course, for example, swaps are an alternative to the existing system of international settlements based on dollars and in general on the currencies of the so-called developed countries. But there are also disadvantages. An infinite number of swaps will be hard enough for calculations: imagine what will happen if everyone conducts their calculations in currency swaps. It can go crazy altogether. What are the alternatives? The dollar doesn't fit. The yuan is also a substitute for soap for an awl. The money that the IMF will issue is the unambiguous creation of a world government, a global mafia that will simply swallow the whole world.
What to do? We need to return to the idea of the International Clearing House, which was announced back in 1944 by John Maynard Keynes. And it was she who was supposed to underlie the Bretton Woods system, but then the United States profited from the war and introduced the dollar as an international settlement currency. What was the original proposal? The fact is that international clearing houses are being created, a gigantic accounting department that deals with accounting for settlements between different countries. It was proposed to create an accounting unit, the so-called bankor, which could not be withdrawn as an independent value. It had no physical appearance, just a computer record. The point is that by the end of a certain reporting period it was necessary to bring the balances to zero. Suppose we delivered grain to Egypt, and Egypt supplied us with bananas in return. This means that the amounts are equal, the trade balances have leveled off. Everyone is happy and got their advantage. Equalize all trade balances so that no one starts trade and economic expansion. This is a form of harmonization of economic relations and the actual elimination of the world's usurers. It is understandable why then all this did not pass. But now is the time to get back to it.
We, the Institute for High Communitarianism, have renewed the idea of an international clearing house. This is a fair form of global settlement, where no one gains an advantage and everyone has an equal opportunity. In order to equalize trade balances, it was assumed, including by Keynes, that one should not go beyond certain limits. And for the excess of debit or credit balances, that is, their foreign trade settlements - the corresponding penalties. And these revenues are taken away and go to the poor countries, helping them to level the economy. Here, the only advantage is given to the country that starts this process, because in the strategy, the one who sets the rules, having the opportunity to change them, has an advantage. And the second point. The basis of a banker, in order to fulfill obligations, is supposed to be filled with goods or guarantees in the form of contributions, for example, in precious metals. Suppose 10% of the amount of annual foreign trade payments, which would be worth depositing in some kind of storage facility. Russia would be ideal as a repository as the center of the world, as a Eurasian power.
Announced the inclusion of the Chinese national currency in the basket of SDR (Special Drawing Rights) - an international means of payment issued by the IMF. Thus, the yuan joined the list of reserve currencies of the IMF, which also includes the US dollar, euro, pound sterling and yen, according to an official press release of the organization.
“The Executive Board's decision to include the renminbi in the SDR basket is a milestone in integrating the Chinese economy into the global financial system. It also recognizes the progress made by the Chinese authorities over the years in reforming the monetary and financial systems. will lead to a stronger international monetary and financial system, which in turn will support the growth and stability of China and the global economy, "said IMF Managing Director Christine Lagarde.
From now on, the SDR value will be based on the weighted average value of currencies included in the basket of currencies comprising the US dollar, euro, Chinese yuan, pound sterling and Japanese yen. The inclusion of the yuan will increase the attractiveness of the SDR by making the basket of currencies more diversified and more representative of the world's leading currencies, Lagarde said.
According to her, the interest rate on assets in the SDR will also continue to be set as the weighted average interest rate on short-term financial instruments in the markets of currencies included in the SDR basket. The authorities responsible for all the currencies in the SDR basket (which currently include the Chinese authorities) are expected to maintain an economic policy framework that facilitates the transactions of the IMF, its member countries, and other users of SDRs in these currencies.
It is noteworthy that on November 27, the Bank of Russia included the Chinese yuan in the list of currencies used for investments in gold and foreign exchange reserves. However, the Central Bank has not yet carried out operations for the physical purchase of yuan. The Central Bank does not plan to carry out transactions on the purchase of assets denominated in yuan in the near future, the TASS agency reported, citing two sources familiar with the situation.
Even then it was reported that, according to experts from the British bank Standard Chartered Plc, which is actively working in Hong Kong, since China has fulfilled all the technical requirements, the probability of including the yuan in the SDR basket is 90%. If this happens, in the next five years, China will receive investments of 4 trillion yuan ($ 628 billion), predicts Deutsche Bank AG.
"The transfer of part of its gold and foreign exchange reserves to yuan, as well as the inclusion of the yuan in the IMF's borrowing basket will be a landmark event for the world economy," said Nikita Kulikov, executive director of Heads Consulting. will strengthen his position. "
The composition of the SDR basket, consisting mainly of the US dollar, euro, pound sterling and yen, determines the currency structure of loans to countries in need of the fund's assistance. The IMF analysts estimated that the share of the yuan in the SDR basket could be about 14-16%.
In 2010, the IMF refused to include the yuan in the SDR, noting that the Chinese national currency did not meet the definition of "freely usable". This year, the yuan became the main currency of cross-border settlements in the Asia-Pacific region, in which China and Hong Kong participate, and also surpassed the yen to rank fourth in the ranking of the most used world currencies. True, the use of the yuan for investment remains minimal, primarily it is used in trade settlements. At the end of this year, the IMF is to complete another review of the basket of reserve currencies, on the basis of which the fund forms the SDR.
China has taken a number of steps in recent months to liberalize its monetary system and interest rates, as well as internationalize the national currency, including launching a gradual lifting of capital restrictions. All these measures, according to analysts, were aimed at strengthening the global role of the yuan and creating conditions for its inclusion in the basket of reserve currencies of the International Monetary Fund.
The Chinese yuan was included in the Special Drawing Rights (SDR) basket. This means that the Chinese currency will officially become a world reserve asset, which circulates within the International Monetary Fund (IMF) along with the dollar, euro, British pound sterling and Japanese yen.
As stated by the head of the IMF Christine Lagarde, the decision will come into force on October 1, 2016. In the SDR basket, the yuan will be given 10.9 percent, that is, it will be in third place after the dollar (41.73 percent) and the euro (30.93 percent). The top 5 will be closed by the pound sterling with a share of 8.09 percent and the Japanese yen (8.33 percent).
"The Executive Council's decision to add the yuan to the SDR basket is an important milestone in integrating the Chinese economy into the global financial system. It also recognizes the success of the Chinese authorities in implementing reforms in the country's monetary and financial system in recent years," said Christine Lagarde. free currency standards. The SDR basket, which includes the yuan, better reflects the global economy. "
When the SDR basket was created in 1969, the IMF agreed that Special Drawing Rights would be an artificial reserve means of payment, which regulates the balance of payments of each country, the settlement of loans issued by an international organization, and the replenishment of reserves.
Strictly speaking, the yuan will not be considered the actual global reserve currency from October 1, 2016. It will still have to grow to this status, since in the understanding of the expert community, the currency becomes world currency when it is actively used in cross-border trade and its share is high in the reserves of central banks. Another important point is the ability to use the currency during the financial crisis. Now the status of the reserve currency has been secured by five "players" that almost completely duplicate the SDR basket: the US dollar, the euro, the pound sterling, the yen and the Swiss franc.
According to SWIFT estimates, over the past three years, the yuan has become one of the most widespread currencies in the world. If in 2012 it was on the 12th line in terms of the frequency of use in calculations, then this year it is already on the fourth place. But so far, the yuan does not compare with the frequency of settlements in dollars (44.8 percent) and euros (27.2 percent).
On the other hand, the road to more significant peaks is open for the Chinese currency. Having secured a place in the SDR basket, it can count on the fact that world central banks will more actively buy yuan, and investors will invest in the PRC stock market. He can add at least a trillion dollars in weight thanks to the decision of the IMF, according to Standard Chartered.
Morgan Stanley has gone even further: the bank is waiting for an injection of $ 2 trillion in Chinese assets, and the investment company AllianceBernstein is betting on $ 3 trillion in the long term. But analysts do not undertake to say for sure whether the declared amounts of the addressee will be reached: access to Chinese shares for foreign investors is quota.
In any case, it will not be long before the yuan becomes the world's reserve currency. Vasily Yakimkin, an associate professor at the Faculty of Finance and Banking, RANEPA, believes that the Chinese currency will reach the stated goal in the period from 2017 to 2022, equal in performance to the Japanese yen.
Any currency has three stages of internationalization:
1. International currency used for settlements and investments. An example is the New Zealand dollar, which investors use to buy high yield bonds. In the reserves of the Central Bank, such currencies occupy a small share.
2. Reserve currency: the Central Bank uses it to store some of its own reserves. For example, after World War II, the dollar and the pound were used as reserve currencies. Today, the main reserve currencies are the dollar, euro, yen, Swiss franc and pound.
3. Dominant reserve currency: makes up * reserves of all Central Banks. Such currencies are the pound and the dollar, the share of which in the foreign exchange reserves of all Central Banks of the countries for the last 60 years has been fluctuating within 45-75%.
At the moment, the yuan is in the first stage of internationalization. The yuan is almost never used outside the PRC; non-residents of China do not use this currency. The capital account of the PRC is completely controlled by the authorities, so the yuan simply cannot become a reserve currency in such conditions.
In the winter of 2012, Hang Seng Bank (the second largest bank in Hong Kong) launched the world's first yuan-denominated exchange-traded fund (ETF) on the Hong Kong Stock Exchange to expand the circulation of the currency in the market. In December 2011, the Chinese authorities also took steps to expand the renminbi's international presence.
Then Japan and China signed a currency pact that allowed Japanese companies to sell yuan-denominated bonds in China. In retaliation, Tokyo will spend $ 10 billion of its foreign exchange reserves to buy China's government bonds. the national banks of a number of countries, including Brazil, Malaysia and Nigeria, began to store part of their foreign exchange reserves in yuan.
In April 2012, a decision was made to expand the “currency band” for the yuan exchange rate. Chinese companies were allowed to invest overseas in RMB, and qualified foreign institutional investors were allowed to purchase shares of Chinese companies for RMB.
In general, the volume of settlements on international trade transactions in yuan in 2011 amounted to about 8% of the total volume of China's trade in goods and services. Monthly transfers in yuan for international settlements in Hong Kong increased to nearly $ 25 billion. per month in 2011, which is more than two times higher than the average in 2010. In Hong Kong, bond issues in yuan "dim sum" also increased, the volume of which increased 3 times from 2007 to 2010. and reached a record level of approximately $ 10 billion. in the II quarter of 2011.
An important factor contributing to the increase in the international status of the national currency is low inflation in the issuing country. In order to stabilize the dynamics of the exchange rate, inflation should not exceed 3-5% per year. According to this criterion, the Chinese national currency is relatively stable. In 2002-2012. China's inflation rate ranged from -0.8% in 2002 to 5.9% in 2008. However, we note that over the same period, the inflation rate of other issuers of world currencies varied within narrower boundaries: in the USA - from -0.3 to 3.8%, Japan - from -1.4 to 1.4%, Great Britain - from 1.3 to 4.5%.
According to SWIFT (Society for Worldwide Interbank Financial Telecommunications), in January 2013, international payments in yuan increased by 171% compared to the same period in 2012, which allowed the PRC to increase its share of the world market to a record 0.63%.
In January 2012, the yuan was only the 20th most used for international payments. At the moment, the yuan ranks 13th in the ranking of payments of world currencies (Figure 1).
Rice. 1
yuan currency internationalization
At the same time, on February 20, 2013, the People's Bank of the Celestial Empire acknowledged that the dollar will remain the dominant currency in the coming decades.
Thus, despite the fact that the PRC government is trying to convert the yuan into an international currency, there are a number of objective factors (share in the world economy and international trade, low inflation, the volume of international reserves) that contribute to the further internationalization of the Chinese yuan. However, the presence of restrictions on fluctuations in the exchange rate of the yuan and on capital transactions in the balance of payments, the insufficient development of the financial market in China, as well as the structure of the PRC's international reserves will hinder an increase in the international status of the Chinese national currency.
The Chinese yuan will be included in the list of reserve currencies of the International Monetary Fund. This decision was made at a meeting of the IMF Executive Board on November 30. The Chinese national currency will become the fifth member of the basket of reserve currencies after the US dollar, euro, British pound sterling and Japanese yen. The yuan will receive an 11% share of the basket, the IMF announced. This is more than the British pound and Japanese yen are holding. The largest share belongs to the American dollar.
The last time the list of currencies included in the basket was changed was in 1999: then the French franc and the German mark were excluded from it and the euro was included.
The yuan will differ from other reserve currencies in that it will become the only reserve currency with a fixed rate at the moment.
In addition, unlike other members of the list, the yuan cannot be bought and sold freely. The Chinese national currency will become freely convertible only in 2020.
The decision of the IMF Executive Board did not come as a surprise to the market. The fact that the yuan is ready to enter the reserve currency basket, the head of the IMF Christine Lagarde announced on November 13. According to her, the fund's staff conducted a study, according to which the yuan began to meet the criterion for the free and wide use of currency in cross-border transactions and can be put on a par with the four currencies of the IMF basket.
The discrepancy between this very criterion of "free use" was the reason that in 2010 the IMF refused to include the Chinese currency in the reserve list. After that, official Beijing embarked on a series of monetary reforms, the purpose of which was to bring the national currency in line with the requirements of the IMF.
In addition, Lagarde noted two weeks ago that the yuan is "widely traded" in the world's major foreign exchange markets. "Staff are proposing to the executive board to include the yuan in the basket of reserve currencies," the IMF said in a November 13 message. “I agree with the conclusions of the fund's staff,” Lagarde said in the fund’s message.
“This is an important milestone on a path that will undoubtedly include more reforms,” Lagarde said after the conclusion of the IMF board meeting.
The basket of reserve currencies is the international reserve asset created by the IMF in 1969 and called Special Drawing Rights, or SDRs. In the second half of the 20th century, the volume of international supply of two of the most important reserve assets - gold and US dollars - was insufficient to support the ongoing expansion of world trade and the development of the financial sector. Then, in 1969, the IMF created the SDR to support the Bretton Woods system of fixed exchange rates. But after a few years, the system disintegrated and the main currencies switched to a floating exchange rate regime. The need for SDRs has diminished. However, later SDR allocations, carried out in 2009 for a total of SDR 182.6 billion, provided liquidity to the global economic system and supplemented the official reserves of member states during the global financial crisis, according to the official materials of the IMF.
The SDR value is based on a basket of four key international currencies and is calculated as the aggregate value of specified amounts of the four currencies in the basket in US dollars, based on exchange rates quoted daily at noon on the London Stock Exchange.
SDRs can be exchanged for freely usable currencies. As of March 17, 2015, SDR 204 billion (equivalent to approximately $ 280 billion) had been created and distributed to Member States.
The inclusion of the yuan in the list of reserve currencies may increase the interest of world central banks in this currency. But it all depends on how quickly Beijing can open its markets to the world.
In mid-November, Standard Chartered predicted that the granting of the yuan a new status would entail an increase in foreign investment in Chinese assets over the next five years by $ 0.7-1 trillion.
However, other financial institutions called such a move "purely symbolic" unless it was followed by major structural reforms. So, Daiwa Capital Markets believes that without reforms, the entry of the yuan into the basket "will practically not matter," Bloomberg reports.
The entry of the yuan into the basket of reserve currencies will also entail a new wave of pressure on official Beijing, the Wall Street Journal writes.
The attention of international investors and financial institutions will be riveted on how China will open its financial system to the world and fulfill the conditions for easing the rigid fixation of the yuan exchange rate.
The People's Bank of China, which plays the role of the country's central bank, will also have to offer foreign investors the same degree of clarity and transparency that the US Federal Reserve System (FRS) and the European Central Bank provide. So far, most of the actions of the People's Bank come as a surprise to market participants: this can be said both with regard to the devaluation of the yuan in August, and in the case of the tacit behavior of the Chinese Central Bank during the collapse of Chinese stock markets in July this year.
“For most investors, the inclusion of the yuan in the basket of reserve currencies will not be a big deal. The only sound you'll hear is a collective yawn, TCW managing director David Levinger told the Wall Street Journal. "Lack of data and transparent policies remain the main risk for investors."
The Chinese regulator sees this problem and realizes the need for some change in the process of communicating with market participants. “We must create confidence in yuan-denominated assets from both domestic and foreign investors and at the same time prevent financial risks associated with the currency's expansion to a more global level,” said the head of research and statistics at the People's Bank of China (playing the role of the central bank in the country) Sheng Suncheng. "This requires a variety of coordinated financial reforms."
However, there is a difficult task on the way of the People's Bank - to maneuver between the expectations of foreign investors and the demands of the leadership of the Communist Party, which continues to influence major decisions in the country not only in the field of politics, but also in the economy.
