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Published on : Nov 16, 2015

The International Monetary Fund (IMF) has recently decided to grant a reserve currency status on Yuan, the official currency of China. This move is considered as a major milestone in the nation’s economy. Which is likely to accelerate the demand for Chinese assets across the globe.

Yuan will be added to the basket of elite currencies such as Yen, Euro, Dollar, and Pound, which are also known as a lending instrument of IMF, after the implementation of this decision. China is hoping that after this move, the global powers, governing the fund, will start acknowledging the strength and global reach of the second largest economy of the world.

Although the reserve currency status will strengthen the status of Yuan in the global arena, the U.S. Dollar will remain the market leader among all the currencies. The political and economic upheaval, which the country faces at present, is expected to limit the usage of Yuan at a global level in the forthcoming years.

Ms. Christine Lagarde, the Managing Director of the IMF and the IMF staff have endorsed this decision by signing off on the move. The most powerful members of IMF including the U.S. have already lent their support to the Beijing’s bid and made the final approval a mere formality by the IMF board. The approval on bestowing Yuan with reserve currency status is scheduled to happen on Nov. 30th, 2015 in an IMF meeting.

The inclusion of Yuan as a member of the lending reserves of IMF is far more than just economic and political prestige for China. The country has plans to uplift the role of Beijing in the global economy, challenging the economic as well as the political dominance of the U.S. in the global arena.