RMB's Inclusion in SDR Basket "Historic Milestone" for China, Int'l Monetary System: Lagarde

The head of the International Monetary Fund (IMF), Christine Lagarde called the inclusion of Chinese currency, the Renminbi (RMB), into the basket of the Special Drawing Right (SDR) a "historic milestone" for China and the international monetary system. "First of all, it's now considered a freely-usable international currency and this is really a milestone. It's historical for many reasons. First of all, it is the first time that the basket of currencies that determine the value of the SDR is expanded. In the past it has been reduced. (This is the) first time it is expanded. It's the first time that we admit a new currency since the Euro. I think it is critically important for China and for the international monetary system as well. It's part and parcel of the most important currencies in the world. That's really what it means first of all. Second, it's included in that very exclusive club that define the special drawing right," said Lagarde in an interview immediately after Friday's announcement of the RMB's inclusion into the SDR basket. Lagarde said the RMB's inclusion into the SDR basket is necessary for global economic and financial development, and she praised China's efforts on pushing forward the internationalization of the RMB. "We are very proud to have walked that journey with the Chinese authorities, particularly with the People's Bank of China(PBC), which has been extremely active, I can assure you, in the last couple of years to make sure that the RMB was properly included, that all the reforms concerning the financial markets in particular and the supervision had taken place. We are gratified for all this work that was put into it," said Lagarde. Lagarde said the inclusion of the RMB into the SDR basket will bring many benefits to the world. "Well, first of all, it's a currency that actually denominates the value of various bonds, various portfolios. It's a currency that is regarded as exchangeable between central banks and which is acknowledged by the BIS (Bank for International Settlements). So it's really a value of reference. The fact that the RMB is now included and that we have five currencies in the basket, it's very helpful in order to spread risks, in order to manage the risk, in order to hedge against the risk. You know we don't need too much risk. We would rather have stability and predictability which I think will be helped by having a broader and more solid basket of currencies," said Lagarde. The SDR is an international reserve asset that was created by the IMF in 1969 to supplement its member countries' official reserves. It can be exchanged among governments for freely usable currencies in times of need. Last November, the IMF decided to include the RMB in the SDR basket as a fifth currency, which will come into effect on Oct. 1, 2016. More on: http://www.cctvplus.com/news/20161001/8033350.shtml#!language=1 Subscribe us on Youtube: https://www.youtube.com/c/CCTVPlus CCTV+ official website: http://www.cctvplus.com/ LinkedIn: https://www.linkedin.com/company/cctv-news-content Facebook: https://www.facebook.com/NewsContent.CCTVPLUS Twitter: https://twitter.com/CCTV_Plus