China wants its currency to become a global force

The People’s Bank of China, the country’s central bank, wants the renminbi to be used more by global central banks as a reserve currency.

The bank is seeking greater global use of its currency by improving the infrastructure needed to support this. In a statement released yesterday, it also said that cross-border use under the current account will be increased and channels for renminbi financing will be widened.

Last year, the International Monetary Fund included the renminbi to its basket of currencies, which make up the IMF’s reserve currency, or its “special drawing rights” (SDR). The basket already includes hard currencies such as the dollar, the euro, the pound and the yen.

The renminbi’s addition to the SDR becomes effective from October, when it will sit in third place behind the dollar and the euro.

This statement comes a year after the shock devaluation of China’s currency, which caused market ructions and put stock and commodity markets into turmoil.

Yesterday’s statement comes ahead of the bank’s annual report into the internationalisation of China’s currency, which gives updates on measures the government is using to advance the use of the renminbi.

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