The International Monetary Fund (IMF) has hinted that it may accept the Chinese Yuan as a currency for countries to settle their obligations with the IMF following Argentina's recent debt repayment in yuan.
"The RMB is one of the five freely usable currencies that members can and have used to settle their obligations with the IMF," she added, referring to the Chinese currency by its official name, the renminbi.
Ms. Kozack said that negotiations on the $44-billion program are still ongoing. She denied that the IMF received a letter from China stating it would allow Argentina to use a swap line with the Chinese Central Bank to pay off its IMF dues.
"Our team has been working intensively with the Argentine authorities to make progress toward the completion of the fifth review. And to help the authorities address a very complex and challenging situation," she said.
"In terms of the details of those discussions, because the teams are still in discussion, I will not pre-empt those discussions, and I will not get into the details other than to say that the discussions are frequent, and they are aimed at advancing the program."
"With respect to a couple of the other questions on the letter, [our] understanding is that there is no such letter," Ms. Kozack added.
Argentina's Ministry of Economy said the swap would be in a single tranche and freely available for any type of financial operation, adding that the country would look to promote more yuan spot and future operations.
"Financial entities will thus be enabled to open bank accounts denominated in renminbi yuan," the bank stated.
The move comes as the South American nation's foreign currency reserves plummeted due to a severe drought that has reduced grain exports, its major source of dollar earnings, and the peso currency has weakened under the weight of 109 percent annual inflation.
Yuan Far From Dethroning DollarAside from Argentina, Brazil also signed an agreement with China earlier this year that would allow them to conduct trade and investments in their own currencies, further reducing the U.S. dollar's dominance.
According to Mr. Ezrati, China does not have the financial markets to support financial arrangements in yuan, which is one of the requirements for a world reserve currency.
Mr. Erzati contended that in such a case, traders in yuan might face difficulties in securing markets to invest in because China controls the flows of money into and out of the country.