China to take a global step forward

Membership in the elite reserve-currency club beckons, but it brings with it some obligations

Just when we were getting accustomed to China's diplomatic success in bringing Europe and Asia together to launch the Asian Infrastructure Investment Bank, along comes another big test of China's position in the global pecking order.

Next month the International Monetary Fund in Washington will consider if there should be any changes in the composition of the Special Drawing Rights, a synthetic currency the IMF created for issue to central banks. This review comes every five years, and although changes can be made within the five-year time frame, it would be highly unusual to revisit the subject before 2020. The SDR is composed of the dollar, euro, British pound and Japanese yen, with the dollar and euro making up 72 percent. The key issue that the IMF board will be considering is whether the Chinese currency should join the other four currencies as a global reserve currency.