UN based organization The International Monetary Fund has permitted Chinese Yuan as its elite reserve currency. It came in a decision by its expert considered as “an important milestone” for China which is now world second largest economy. So it is now possible to have a good popularity in global currency exchange rate.
By this approval Yuan which is also known as renminbi will add with the US dollar, euro, Japanese yen and British pound from the next year in the list of currencies which IMF uses as an international reserve asset.
An IMF managing director Christine Lagarde said this decision is an important milestone in the integration of the Chinese economy into the global financial system in the coming time.
She also added that this decision is also an achievement of the efforts of Chinese authorities tried in the last few years in reforming Chinese monetary and financial system that now come to a success.
There is no doubt yuan is becoming one of the famous global currency exchange rate or media over the last few decades. Last year China asked IMF to add their currencies in the Fund’s special drawing list.
However it has been seen that in last August Chinese currencies have controlled too tightly to draw the considerstion by IMF. Later IMF staffs expert opined in November that China had taken enough steps to make their currency freely usable which is finalized by Monday’s decision.
It is now clear that, such decision will make China to open up more opportunities in the global economy and as consequence China would become a much more responsible economical power and global currency exchange rate. It is noticeable that the unexpected depreciation of yuan in last August took a strong notice and a handsome marks from the IMF as it extended the global currency’ exchange’s movements based on market forces.
Moreover, China government in last week declared that an initial group of foreign central bank has been permitted to enter the Chinese currency market.
At the end the decision puts the Bank of China no doubt but under pressure to show more transparency in line with its similar institutions like Federal Reserve and European Central Bank.