RMB's Inclusion Could Spark A Massive Reshuffle

RMB’s Inclusion Could Spark Big Reshuffle by Dan Steinbock

THE inclusion of the renminbi in the currency reserve basket is only a matter of time. It could trigger a US$1 trillion re­allocation of global reserve portfolios.

Before the summer, investment banks estimated that, in the medium-term, at least US$1 trillion of global reserves could switch into Chinese assets when, and if, the International Monetary Fund endorses the renminbi as a reserve currency.

However, a few weeks ago, the IMF recommended a delay of the inclusion. When will the IMF include the yuan in its basket and what will be the impact of that decision?

The IMF’s two-step tango

The IMF debate involves the review of its Special Drawing Rights (SDR). Cre­ated in 1969, the SDR...