The IMF's Approval for RMB to Join the Special Drawing Rights Basket: Thinking at a Legal Level

Song Xiaoyan

Journal of Shanghai University of Finance and Economics Vol. 18, Issue 05, pp. 116 - 128 (2016)  DOI:10.16538/j.cnki.jsufe.2016.05.010

Abstract

The IMF's approval for RMB to join the Special Drawing Rights basket means that we promote more countries to choose RMB as their reserve currency and thus accelerate the process of RMB internationalization through IMF's endorsement on constant rise in China's position in global economic and financial markets, on the premise that RMB could not be fully converted in capital account. According to two currency selection criteria carried out in the fixed value framework of the Special Drawing Rights basket, the People's Bank of China takes a series of targeted measures,and forcefully enhances the "freely usable" feature of RMB. But how to keep the independence of monetary policies and maintain the transparency & stability of foreign exchange rates policy framework after then in China needs to depend on the perfection of domestic law and the internationalization of financial reform relying on international law.

Keywords

SDR; freely usable; operational issue; independence of a central bank; intervention on foreign exchange rates