According to US Treasury Secretary Jacob Lew, the Chinese yuan is not ready to be included in the IMF’s basket of reserve currencies. Lew noted that China needs to extend its reform in order to meet the standards of the IMF.
The country should loosen its financial control and set a floating exchange rate of the yuan against the US dollar and other currencies.
Germany and France have already supported China’s bid to be included in the basket. IMF Managing Director Christine Lagarde has said that the only question is when the yuan will be ready.
In 1969, the IMF created the Special Drawing Rights after the Bretton Woods system of fixed exchange rates proved to be inadequate. Currencies, the euro is among them, were included in the SDR. Now, there are four currencies in the basket: the US dollar, the euro, the UK pound, and the yen.
Some programs of China’s monetary policy do not correspond to the US standards. The main issue is the decrease in the yuan’s exchange rate that stimulates exports. Moreover, the Chinese currency is not considered as freely convertible. I t has a limited turnover abroad and the exchange rate changes according to the corridor set by the People's Bank of China.
China’s economy is weaker than the economies of the EU and US; however, it surpasses Great Britain and Japan.
