Deutsche Bundesbank to include yuan in its reserves
January 23, 2018 Category China News Round-up, Weekly
Deutsche Bundesbank, the central bank of Germany, has decided to include the yuan in its reserves, Board Member Andreas Dombret told the Asian Financial Forum in Hong Kong. The German central bank was thereby following in the footsteps of the European Central Bank (ECB) by diversifying part of its reserves into yuan, also known as renminbi. Dombret did not elaborate on the amount or percentage of the central bank’s planned yuan assets. The ECB last year invested €500 million into yuan.
The International Monetary Fund (IMF) included the yuan in its basket of special drawing rights (SDRs) in 2016, giving it nominal status as an international reserve currency. However, the yuan’ ambition of becoming an international currency suffered a setback when the Chinese government started to impose curbs on capital outflows. The yuan exchange rate in both onshore and offshore markets has hit its strongest levels against the U.S. dollar since the end of 2015, partly thanks to the weakness of the greenback. According to the latest figures from the IMF, the share of yuan in the world’s foreign exchange reserves was 1.12% in the third quarter, compared with 1.08% in the previous quarter. In comparison, the U.S. dollar accounted for 63.5% of all reserves, followed by the euro at 20%.
Yin Yong, Vice Governor of the People’s Bank of China (PBOC), said that the yuan had a long way to go before it became a global currency, and China would take a long-term strategic view of the yuan’s internationalization.
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