Thursday, 31 March 2011 - 13:48
Lagarde: Discussed Possible Inclusion Of Yuan In SDR Basket With China
NANJING, China -(Dow Jones)- Possible inclusion of the yuan in the basket of currencies underlying an international reserve currency was one of the main talking points of a Group of 20 seminar held in China, French Finance Minister Christine Lagarde said Thursday, although she said a timetable for its inclusion wasn't discussed.
"We have also talked with our Chinese friends about the need to include the yuan in the special drawing rights according to appropriate conditions and timetable, of course," Lagarde said at the end of an informal seminar on the reform of the international monetary system held under the auspices of the G-20 in Nanjing.
Urging her G-20 colleagues to start work on the issue, Lagarde then went on to echo earlier comments made by her U.S. counterpart Timothy Geithner, stating "currency convertibility, flexibility and central bank independence" as the three conditions for any currency to be included in the SDR basket.
The SDR, or special drawing right, is a synthetic currency created by the International Monetary Fund.
"When a currency is linked to another, then you are basically influenced by the monetary policy of another country," Bank of France Gov. Christian Noyer, who was co-chairing the seminar with Lagarde, said at the same press conference. "You need to have a currency that is freely usable and recognized by the entire world," he added.
Despite the relaxation of its peg to the U.S. dollar last June, the yuan still mostly takes its cue from the dollar.
Expanding the role of the SDR in the global monetary system as well as the basket of currencies underpinning it doesn't mean the SDR will undermine the prominence of the U.S. dollar as one of the world's leading reserve currencies, Lagarde stressed.
"There is no question for the SDR to replace the dollar," she said.
- By Nathalie Boschat, Dow Jones Newswires; +33 (0) 1 40 17 17 45; firstname.lastname@example.org
(END) Dow Jones Newswires
March 31, 2011 07:48 ET (11:48 GMT)
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