Renminbi Joins International Monetary Fund’s Special Drawing Rights Basket: Rationale and Significance

2017 ◽  
Vol 09 (03) ◽  
pp. 76-84
Author(s):  
Jing WAN
Keyword(s):  
Policy Coordination ◽  
International Reserve ◽  
Reserve Currency ◽  
Special Drawing ◽  
The Us ◽  
Push Forward ◽  
Us Dollar ◽  
The 2008 Financial Crisis ◽  
Special Drawing Rights ◽  
The International Monetary Fund

After the 2008 financial crisis, the International Monetary Fund realises that reforms are needed to reduce the reliance on the US dollar as the only international reserve currency. It began to nurture super-sovereign reserve money where SDR (Special Drawing Rights) is the most favourable candidate. Joining SDR will push forward China’s exchange rate reform to meet the standard of a real international reserve currency, which requires more skilful domestic and international policy coordination.

scholarly journals An introduction to the prospect of the Chinese RMB as a reserve currency

2016 ◽  
Vol 11 (1) ◽  
pp. 71-76 ◽  
Author(s):  
Paul Gentle
Keyword(s):  
International Monetary Fund ◽  
Foreseeable Future ◽  
Reserve Currency ◽  
Special Drawing ◽  
Special Drawing Rights ◽  
The International Monetary Fund ◽  
The U.S

On October 1, 2016, the Chinese RMB (yuan) will be included in the SDRs of the International Monetary Fund (IMF). Reserve currencies are select currencies that have special drawing rights (SDRs). This article examines some of the aspects of this impending change of including the Chinese RMB as a select currency. The U.S. dollar is expected to continue to dominate as a select currency, after October 1, 2016, for the foreseeable future. This article has been written so as to provide general economists with some understanding of special drawing rights (SDR) of the International Monetary Fund (IMF) and how the addition of the Chinese RMB will fit in, as of October 1, 2016

The US Dollar as the Global Reserve Currency: Implications for US Hegemony

2017 ◽  
Vol 8 (1) ◽  
pp. 104 ◽  
Author(s):  
Thomas Costigan ◽  
Drew Cottle ◽  
Angela Keys
Keyword(s):  
Reserve Currency ◽  
The Us ◽  
Us Hegemony ◽  
Us Dollar

Multiple Reserve Currencies and Renminbi Use

2017 ◽  
Vol 08 (02) ◽  
pp. 1750011
Author(s):  
Satyendra Kumar Gupta ◽  
Ashima Goyal
Keyword(s):  
Transaction Costs ◽  
Bargaining Power ◽  
Network Size ◽  
Analytical Models ◽  
Reserve Currency ◽  
Market Depth ◽  
Political Determinants ◽  
The Us ◽  
Us Dollar ◽  
Trade Share

We analyze prospects for the Chinese renminbi to become a major international currency, along with the US dollar, in a multiple reserve currency world. Analytical models on switching costs in networks and on currency choice under direct and indirect transaction costs are used to derive variables for empirical analysis. While network size and financial market depth (lower transaction costs) favor incumbents, changes in trade-related bargaining power and in currency volatility could favor newcomers. The models also point to political determinants affecting currency choice. We develop indices to quantify some of these. When the bargaining power index is used in estimation, it shows capital account openness and currency stability have to complement a rise in trade share for an aspiring reserve currency.

The “Sanctions” of the International Monetary Fund

1972 ◽  
Vol 66 (4) ◽  
pp. 737-762 ◽  
Author(s):  
Joseph Gold
Keyword(s):  
International Monetary Fund ◽  
International Monetary System ◽  
The United States ◽  
Legal Structure ◽  
Monetary System ◽  
Special Drawing ◽  
Third Stage ◽  
Special Drawing Rights ◽  
Two Stages ◽  
The International Monetary Fund

Recent events in the international monetary system culminating in the decision of the United States, announced on August 15, 1971, to suspend the convertibility of the dollar induce the international lawyer to ask once again what contribution sanctions can make to respect for international law and the effectiveness of multilateral treaties. This question has been a practical problem at two stages in the development of the International Monetary Fund. It arose first during the negotiation and drafting of the original Articles of Agreement which were adopted at the Bretton Woods Conference in July 1944. The second stage was the negotiation and drafting of the amendment of July 28, 1969, which dealt mainly with the legal structure of special drawing rights as a supplement to existing reserve assets. It is now apparent that there will be a third stage, in which a reform of the international monetary system, perhaps in some of its most fundamental aspects, will lead to a further amendment of the Fund's charter.

Shaping the Future of the IMS: Regionalization of Selected Asian Currencies

2015 ◽  
Vol 01 (03) ◽  
pp. 347-372
Author(s):  
Il Houng Lee
Keyword(s):  
International Monetary System ◽  
Policy Coordination ◽  
Monetary System ◽  
Tier System ◽  
The Us ◽  
Asian Economies ◽  
Market Framework ◽  
Us Dollar ◽  
Second Tier ◽  
Recent Financial Crisis

The dominance of the US Dollar (USD) as the main global reserve currency will continue for the foreseeable future. Yet various events, including the most recent financial crisis, have pointed to the need for an alternative system that will strengthen market discipline rather than a system relying excessively on policy coordination. The rise of Asian economies led by China provides a unique opportunity for a regionalization of selected Asian currencies, namely, the settling of current account transactions among Asian economies using selected local currencies. To do so, relevant governments should be more proactive in setting up a market framework by following similar steps taken by China for RMB internationalization. This will provide an opportunity for the market to determine how fast it wants to shape an alternative international monetary system. Most likely, a tri-polar and two-tier system will emerge. As the medium of exchange and unit of account, the first tier, the USD, the Euro, and the RMB will dominate, forming a tri-polar system along each of which various local currencies will be used specific to the locality. As the store of value, the second tier, the USD will retain its hegemony for a few more decades. Gradually, these two tiers will merge.

The G7 is edging closer to a new round of SDRs

2021 ◽  
Keyword(s):  
Yield Curve ◽  
Developing Economies ◽  
Emerging Market ◽  
Developing Nations ◽  
International Reserves ◽  
Content Type ◽  
Us Congress ◽  
Special Drawing ◽  
The Us ◽  
Special Drawing Rights

Significance The COVID-19 crisis has exposed the disparity in fiscal and monetary firepower between developed and developing economies. Within the G7, support is growing for a new allocation of IMF special drawing rights (SDRs) -- international reserves that can be swapped for hard currency -- now that the US leadership is better disposed to multilateral action. Impacts The US Congress must approve an SDR round over USD685bn; a smaller issue is likely as many Republicans oppose financing Iran and China. The G20’s moratorium on developing nations debt servicing payments is set to be extended beyond June, but vast payment gaps still remain. The rising US yield curve and dollar rally will pressure emerging market borrowers by raising their dollar-denominated debt repayments.

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