Renminbi As The Fifth International Reserve Currency

Renminbi As The Fifth International Reserve Currency by Dan Steinbock, Difference Group

If the IMF will endorse the renminbi as a new international reserve currency, the repercussions will be global and historical.

Recently, the International Monetary Fund's staff and its chief Christine Lagarde suggested that the yuan should join the basket of international reserve currencies (the Special Drawing Rights, or SDR). The inclusion is expected to be approved at the IMF board meeting on Nov 30.

It would make the yuan the first currency of an emerging economy to be included in the basket. And it could unleash three waves of capital inflows into the Chinese currency.

Three waves of capital inflows

In the first wave, the yuan's inclusion would cause a...