G7 agree in principle on China joining IMF’s major league

29-May (Reuters) — Finance chiefs from the Group of Seven industrial nations agreed on Friday that including China’s renminbi in the International Monetary Fund’s currency basket is desirable, but a technical review must be completed first.

The inclusion of the renminbi, also known as the yuan, as part of the IMF’s unit of account would mark another stage in China’s rise as a global economic player, requiring the United States to accept a dilution of its power in international finance.

German Finance Minister Wolfgang Schaeuble, who hosted the G7 meeting in Dresden, said the finance chiefs discussed the possible inclusion of the renminbi in the basket of currencies that makes up the IMF’s Special Drawing Rights (SDR).

The SDR is a virtual currency that defines the value of IMF reserves, used for lending to countries in financial difficulty.

“We were completely agreed that it is desirable in principle, that the technical conditions must be examined, but there are no politically divergent views on this,” Schaeuble told a news conference at the end of the two-day meeting.

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PG View: That “technical review” is likely to include a full accounting of China’s reserve holdings. The world is particularly interested in how much gold the PRC has acquired since they last announced their gold holdings in 2009. Some are suggesting they may have trebled in the last 6-years.