This is what economists from Bank of America Merrill Lynch say. They are convinced the IMF will take in the Asian currency as among the notes composing SDR or “Special Drawing Rights” this October. It is a form of meta-currency for IMF transactions. The other currencies are USD, EUR, GBP, and JPY.
Economists say this will legitimize the Yuan as reserve currency. Moreover, the benefit for Beijing is that it can possibly lessen the nation’s foreign borrowing expenditures and offer more leverage in subsidizing current account arrears for the future. The People’s Bank of China has been advocating inclusion of the currency in the SDR for so long.
As reserve currency, its weight in the SDR system will probably be higher than pound sterling and yen. Based on forecasts from Merrill Lynch, central banks worldwide have an aggregate of over $80 billion in terms of Chinese government bonds making it the seventh biggest reserve currency globally.
Meanwhile, the China Construction Bank Corporation opened the first-ever money-market fund denominated in the Chinese currency which is based in the euro zone. It is considered a landmark in the Yuan’s emergence as primary force in world FOREX markets. This is a new exchange-traded fund included in the London Stock Exchange. It is also available to traders across the EU as well as the first product that provides Western investors access to securities in the interbank bond market of China. The fund is known as CommerzBank CCBI RQFII (Money Market UCITS-ETF) and began trading yesterday.
Said ETF may be the first of numerous Chinese currency funds to be launched in developed economies to entice investors with higher returns.
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