CCB chief calls on central banks to add RMB to their reserves
BEIJING - China's yuan should be "immediately" included in the special drawing rights (SDR) basket of the International Monetary Fund (IMF), a top Chinese banker said on Tuesday, adding that the greater status of the yuan will help stabilize the global financial system.
"The IMF should put the yuan in the SDR basket immediately," said Guo Shuqing, chairman of China Construction Bank, the world's second-largest lender by market value, and former head of the country's foreign exchange regulator.
Guo Shuqing, chairman of China Construction Bank
Guo said that overseas central banks, including those in the European Union, Japan and the United States, should hold a certain amount of yuan as currency reserves through agreement with China.
The world's major commodity exporters, such as countries in the Middle East, should also be encouraged to use the yuan for trade settlement, he added.
Guo's comments came after finance ministers and central bank governors at the G20 summit in Seoul called for China to take a greater role in shaping the global financial order.
The IMF on Monday cut the weighting of the US dollar to 41.9 percent from 44 percent and the Japanese yen to 9.4 percent from 11 percent in its SDR basket.
The fund increased the euro's share to 37.4 percent from 34 percent.
Guo said that China should have greater representation in international financial organizations if the world expects the nation to take more responsibility in stimulating global economic recovery.
China is actively promoting wider use of the yuan internationally in order to reduce dependence on the US dollar, whose value has been falling over the past three months and could decline further after the Federal Reserve decided to buy $600 billion in government bonds to boost domestic growth.
Some emerging economies have called for the yuan to replace the dollar in regional trade settlement to reduce the impact of currency volatility, especially linked to the weakening of the dollar.
Thai Prime Minister Abhisit Vejjajiva, fearful of the effects of the soaring baht due to massive capital inflows, has proposed that the yuan is used as a major regional trading currency.
China plans to boost yuan-denominated cross-border trade with other countries tenfold to a fifth of its total trade, or more than $376.7 billion, according to Jin Zhongxia, deputy director-general of the international department of the People's Bank of China, the nation's central bank.
Global trade transactions settled in yuan will total about $2 trillion annually within five years, according to a report published by HSBC Holdings.
At least half of China's total trade flows with emerging markets will be completed in yuan, compared with less than 3 percent now, the report said.
In the meantime, the Chinese authorities are also planning to let overseas funds and brokerages take yuan deposits and invest them in mainland capital markets.
This move is intended to enhance the international appeal of the Chinese currency and give foreigners more channels to invest their yuan holdings.