Renminbi could reach “status of international reserve currency”

ChinaChristine Lagarde, managing director of the International Monetary Fund, said with financial reforms the renminbi could reach the “status of an international reserve currency and occupy a position on par with China’s economic size”. Speaking yesterday at the China Development Forum in Beijing, Lagarde said China needed to accelerate efforts to transform China’s “economic mode”. Lagarde highlighted a stronger and more flexible exchange rate for the renminbi. She urged the government to implement reforms for more effective liquidity and monetary management, high quality supervision and regulation. More well developed financial markets and products, flexible deposit and lending rates and finally opening up the capital account were other reforms she suggested. “I cannot do justice here to the gamut of financial reforms needed to underpin this transformation of China’s financial system,” she said. Lagarde said China was in the “enviable” position of being able to provide a much-needed lifeline to global growth and to assume a greater role as a development partner for low-income countries. “If the emerging markets are to continue to prosper and help keep the global economy afloat, as they did through the depths of the crisis, they too must act,” she said. “Not just in their own interests, but in the global interest.” ©2012 funds europe

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