China wants to have more say in the international community and it is using the International Monetary Fund as a vehicle.
Specifically, it wants to be included in the fund’s own reserve currency, the Special Drawing Rights (SDR). As usual with the IMF, this is more a matter of prestige, rather than practical value—there are only $285 billion worth of SDR in circulation worldwide.
For now, however, China, is fine with gaining international recognition for its currency and by extension for its economy. The country this year has officially asked to be included in the SDR, which is formally reviewed at the end of the year.
Here is where it becomes interesting. Although the IMF has gradually removed opposition to including the yuan in the SDR, for example by saying the currency is no longer undervalued, other elements haven’t proceeded as smoothly.
This has been an ongoing issue for the United States, but in secret, U.S. officials in Beijing have admitted the United States doesn’t oppose the yuan becoming part of the SDR, maybe because it agrees with the IMF assessment.
