IBU Executive Board finds no grouns to suspend Russia's biathlon teamSport January 21, 22:53
Russia terrified watching monuments destroyed in Palmyra — culture ministerRussian Politics & Diplomacy January 21, 17:08
Russian bombers deliver successfully strikes on terrorists' facilities in SyriaWorld January 21, 15:39
Denmark uses Russian data in its application for expanding shelf — ministerBusiness & Economy January 21, 15:15
Agreement on bases in Syria to serve strengthening of stability in Middle East — MPRussian Politics & Diplomacy January 20, 21:18
Trump's inaugural address: When America is united, America is totally unstoppableWorld January 20, 20:57
Hermitage chief: New Palmyra destruction comes across as militants' vengeanceRussian Politics & Diplomacy January 20, 20:29
Russia's first deputy PM wants to keep current tax system for next political cycleBusiness & Economy January 20, 19:53
Russia’s Shipulin clinches gold in 20km individual race of IBU World Cup stage in ItalySport January 20, 19:18
This content is available for viewing on PCs and tabletsGo to main page
MOSCOW, December 2. /TASS/. The economic effects of the decision in favour of including China’s yuan in the list of world reserve currencies are no smaller than political ones, many Russian experts agree. It reflects the country’s real role in the world economy. However, to become a full-fledged reserve currency it is necessary to take a number of measures to ensure its free conversion. No one should feel a shade of doubt the Chinese currency will be taking an ever greater share of the world market of international settlements.
Last Monday the International Monetary Fund made a long-expected decision to include the Chinese yuan in the basket of its reserve currencies used to calculate the value of the special drawing rights (SDR). This will enable borrowers to take yuan-denominated loans. The yuan will join the dollar, the euro, the pound sterling, and the yen on October 1 next year. Its share will be third largest (10.92%) after the dollar (41.73%) and the euro 30.93%.
Some say the IMF’s decision is rather political, because China does not yet match all requirements the basic reserve currencies are to meet. No other country would have been allowed into the basket of reserve currencies, other things being equal. But China’s role in the world economy is too great.
China’s yuan rose to number four position in the world just recently. Three years ago it was number 12, but now it has caught up with the chief competitors: the dollar, the euro and the pound sterling, the international inter-bank system SWIFT said in a report in October.
Yuan is now one of the currencies Russia will be able to use to invest its gold and exchange reserves under a decision the Bank of Russia, made last Friday. No yuan-denominated assets will be acquired right away, though.
"That’s an economic victory 70%, because the yuan’s recognition is tantamount to its recognition of a market economy currency," Professor Aleksandr Abramov, of the Higher School of Economics, told TASS. "The IMF’s decision was quite logical. There still remain certain doubts about the convertibility of the yuan, but the IMF is aware that the yuan is far ahead of many currencies as a means of payment."
The yuan is already being used as a reserve currency in the IMF and the reserves of 30 central banks of different countries, Abramov said. "It has already pushed back the Swiss franc somewhat and may offer strong competition to the Japanese yen and the British pound, but its chances regarding the dollar and the euro are equal to nothing. The influence of the latter two currencies is immeasurably higher."
There are some other opinions, though.
"This will add to China’s political image a great deal, but the economic effects will be meager," an expert on Chinese affairs, Mikhail Karpov, told TASS. "Yuan will remain an unconvertible currency in the foreseeable future."
The IMF’s decision establishes a more adequate correlation between China’s economic potential and its hitherto moderate role in the world currency system," the head of the economics and finance department at the presidential academy RANEPA, Alla Dvoretskaya, told TASS. "All countries will now be oriented towards China and include its currency in their foreign exchange reserves."
"China will now have just one year to make the yuan a genuine reserve currency, a freely convertible one, and to lift all restrictions from free trade in it," Dvoretskaya said.
"This is a gesture of recognition of China’s economic strength and its real role in the modern world," senior research fellow Nikolai Troshin, of the Economic Research Centre at the Russian Institute of Strategic Studies, told TASS. "The worst problem for them is relationship between the offshore yuan and the onshore yuan. The offshore yuan’s convertibility is rather limited. China is to make certain steps to bring about real change."
TASS may not share the opinions of its contributors