|Vittorio Hernandez |||Mar 14, 2015 02:10 AM EDT|
(Photo : Reuters) A clerk counts 100 yuan banknotes at a branch of China Construction Bank in Nantong, Jiangsu Province.
In the past two years, China's currency, the yuan, achieved two significant milestones. In 2013, it took the euro's place as the second-most used currency in trade finance. In December, the yuan dislodged the Canadian dollar as the fifth-most used currency for international payments.
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Given these two landmark events, China aims for another upgrade for its currency by seeking the yuan's inclusion in the International Monetary Fund's basket of currencies, reports the Sydney Morning Herald.
IMF's basket is currently made up of four currencies - the U.S. dollar, euro, Japanese yen and British pound. In the later part of 2015, the IMF will hold its review of currencies in the fund's Special Drawing Rights that IMF members could consider official reserves. The review is done twice every 10 years.
The fund has two criteria for inclusion in the basket. First, is the country is a major trading nation. The measure of this is the currencies whose exports of goods and services during the five-year period that ended 12 months prior to the effective date of revision had the highest value.
Second, is freedom of use criterion for currencies which the IMF has determined to be widely used for payment of international transactions and is widely traded in the principal exchange market, according to Caixin.com.
During the 2010 review, China met the first criterion but failed in the second.
For the forthcoming review, China may have better chances since the Bank of International Settlements boosted its use of the yuan from US$0.9 million in Q3 2010 to US$29.56 million in Q2 2014.
The yuan is currently the seventh-largest reserve currency and ninth in the outstanding amount of international debt securities.
Yi Gang, deputy governor of the People's Bank of China, confirmed the Chinese central bank is talking with the IMF to further boost the yuan's internationalization
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