As part of China’s plan to open up their financial markets on a global scale, members of the International Monetary Fund (IMF) are currently there to assess the suitability of the Chinese yuan (or renminbi – the people’s currency) to become one of the world’s reserve currencies. Last week, the People’s Bank of China (PBoC) published a list of proposals to encourage the IMF to give the yuan the same elite standing as the other reserve currencies – the dollar, yen, euro and pound sterling.
The PBoC’s proposals include allowing access to other central banks and institutional investors to the bond market within China. It will also allow foreign entities to sell their yuan-denominated debt, and provide Chinese companies with the option of issuing overseas bonds. Lastly, it will slacken the restrictions on Chinese companies and individuals to invest in foreign-held assets.
With the introduction of the Asia Infrastructure Investment Bank and China’s yuan likely to be added to the IMF’s currency basket, the balance of global financial power is clearly moving eastwards. If you are seriously concerned that the importance of the U.S., in terms of global standing, is being irreparably weakened by these developments, please Like & Share this post.
