PBOC Prepares New SDR Push

China Rallies Around Yuan as IMF Mulls Reserve-Currency Inclusion

In a new report issued late last week, the People's Bank of China detailed moves it will take to help gain reserve-currency status for the yuan, also known as the renminbi, or people's currency. They include opening the door wider for foreign central banks and other institutional investors to invest in China's bond market.

The central bank also will give foreign entities greater freedom to sell yuan-denominated debt in China, and for Chinese companies to issue such bonds overseas. Further, it will ease limits on Chinese individuals and companies investing in foreign assets. The report didn't specify a timetable.

...In recent months, China has accelerated the overhaul by putting in place a long-awaited deposit insurance system and moving closer to free up interest rates, a critical element in revamping its financial sector. In addition, it has allowed greater access for foreign investors to buy Chinese securities, and vice versa. It is also putting final touches on a plan to make it easier for Chinese residents and companies to directly purchase stocks, bonds and real estate in foreign markets.

"China is not far from realizing its goal of capital-account liberalization," the PBOC said in its report, referring to free cross-border flows of funds for financial transactions.