China wants to have more say in the international community and it is using the International Monetary Fund as a vehicle. Behind the scenes, the whole process has turned into a fierce negotiation about who will control global finance in the future.
Superficially, China wants to be included in the fund’s own reserve currency, the Special Drawing Right (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. However, in reality, China wants much more:
“I think they are looking at a fair seat at the table. They don’t want to be a junior cousin,” said Simon Mikhailovich, managing director of the Tocqueville Bullion Reserve Fund.
The first step is the inclusion in the SDR, which is formally reviewed at the end of the year. The next step is to increase its capital and voting power at the IMF, which is a separate process.
