WASHINGTON: The International Monetary Fund (IMF) welcomed China’s yuan into its elite reserve currency basket on Monday, recognizing the ascendance of the Asian power in the global economy.

The yuan, also known as the renminbi, will join the US dollar, euro, Japanese yen and British pound next year in the basket of currencies the IMF uses as an international reserve asset.

IMF Managing Director Christine Lagarde called the decision “an important milestone in the integration of the Chinese economy into the global financial system.”

“It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems.”

The move by the IMF executive board, representing the institution’s 188 member nations, solidifies China’s ambition to see the yuan achieve global status as one of the world’s top currencies.

The world’s second-largest economy asked last year for the yuan to be added to the Special Drawing Rights basket, but until recently it was considered too tightly controlled to qualify. The yuan already had met the IMF’s criteria for being widely used. The board approval had been widely expected after IMF staff experts earlier in November said that Chinese authorities had taken the steps necessary for the yuan to be called “freely usable”, and Lagarde endorsed their recommendation.

Lagarde said the yuan’s inclusion was expected to help China open up further to the world economy.

Published in Dawn, December 1st, 2015