Is China paving the way for the yuan to become the world’s next reserve currency? At the beginning of this month its central bank announced that it was for the first time using its own currency rather than dollars to buy IMF bonds. China agreed to buy $50 billion-equivalent of the Fund’s special drawing rights as part of the official sector’s fight against the international financial crisis. China’s loan is part of a $500 billion emergency pool of funds the IMF is making available to troubled countries through the issuance of SDRs, a currency basket comprising dollars, euros, yen and sterling.
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