IMF looks to expand special drawing rights

HANGZHOU, Sep 7: The International Monetary Fund is exploring ways to broaden the use of its Special Drawing Rights after the leaders of the G20 reached a consensus on the matter at the G20 Summit in Hangzhou to enhance the resilience of the international financial system, IMF chief Christine Lagarde has said.
The IMF was really encouraged by the determination of China to use the SDR as a yardstick to measure reserves and as a currency for bond issuance, Lagarde told reporters on Monday at a news conference after the conclusion of the summit.
The call for greater use of SDR, a synthetic reserve currency administrated by the IMF, has been strongly backed by China as the country has been working to lift the global profile of its currency. The yuan will be officially included in the IMFs currency basket on Oct 1.
Lagarde vowed that the IMF will continue to expand the representation of emerging and developing economies in the organisation as it needs to serve the entire membership.
The IMF chief also reiterated that the Chinese currency meets the criteria for the inclusion in the SDR as the Chinese monetary authority has made constructive progress by making its monetary policy more market-determined.Experts said that the expansion of the use of the SDR will help improve the stability of the global financial system and the inclusion of the Chinese currency will in turn empower the influence of the SDR in international markets.-ANN
The yuans inclusion in the SDR will, to some extent, increase the influence of the SDR and enable it to play a greater role in the international financial markets, said E Zhihuan, an academic committee member at the International Monetary Institute of Renmin University of China.
The World Bank issued a landmark bond denominated in the IMFs SDRs in the Chinese interbank market last week.
World Bank President Jim Yong Kim said earlier that issuance of SDR bonds in China would support the G20s objective of expanding the use of the SDR, which has been listed as one of the G20s key financial tasks.    �ANN