Bundesbank chief: Recent turmoil shouldn’t change debate on yuan
China’s move to get the yuan into the International Monetary Fund’s benchmark currency basket received a positive sign from Jens Weidmann, the head of Germany’s central bank.
The Bundesbank chief told Reuters that the recent financial market turmoil in China and uncertainty about its economic outlook should not change the debate.
“I am open in the discussion about taking the yuan into the IMF currency basket,” he told Reuters ahead of a meeting of the Group of 20 industrial and emerging economies in Ankara, though he added that China must fulfill the conditions for inclusion. “The currency basket should in principle reflect relative global economic strengths.”
The recent drop on China’s stock market was “partly a correction of the earlier dramatic rise in stock prices,” said Weidmann, who also sits on the European Central Bank’s policymaking Governing Council. “I don’t see a lasting danger for the global economy.”
Beijing has made it a prime policy objective to get its currency included in the IMF’s Special Drawing Rights basket, along with the euro, yen, pound and dollar. The SDR determines the mix of currencies that countries like Greece receive as IMF disbursements.
The SDR basket requires its currencies to be “freely usable,” or widely used to make international payments and widely traded in foreign exchange markets.
The IMF viewed last month’s devaluation of the yuan by Beijing as a move toward a freer exchange rate, which helps the yuan’s chance of inclusion. On Thursday, IMF deputy spokesman William Murray said the fund plans to complete a review of its SDR basket by the end of the year.