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Inclusion of the renminbi in the Special Drawing Rights basket: technical and economic implications

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  • Pilar L’Hotellerie-Fallois
  • Lucía Sánchez
  • Xavier Serra

Abstract

In October 2016, after a long and controversial review, the IMF included the renminbi in the special drawing rights (SDR) basket. On one hand, this amounted to recognition by a multilateral forum of the financial liberalisation undertaken by the Chinese authorities in recent years, while, for the IMF, it was a further step in the reform process it had launched in the 2000s, to increase the weight of the emerging economies in its governance. This article explains the main characteristics of the SDR, reviews the process that was followed to include the renminbi in the basket and examines the implications such inclusion may have for China, the IMF and the international monetary system (IMS) as a whole. It also discusses the channels through which the role of SDRs in the international financial system could be boosted, although the most important prerequisite for this is the firm support of institutions and the international community.

Suggested Citation

  • Pilar L’Hotellerie-Fallois & Lucía Sánchez & Xavier Serra, 2016. "Inclusion of the renminbi in the Special Drawing Rights basket: technical and economic implications," Economic Bulletin, Banco de España, issue DEC, pages 24-37, December.
    • Handle: RePEc:bde:journl:y:2016:i:12:n:3
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