IMF staff recommend deferring inclusion of RMB in SDR basket

HONG KONG – An IMF staff report has recommended deferring inclusion of China’s renminbi in the IMF’s Strategic Drawing Rights basket. The report recommends that the current SDR basket, due to expire on December 31, be extended until September 2016, but says “an extension would not in any way prejudge the timing and outcome of the review, or whether the RMB should be included in the basket.”

HSBC says the staff recommendations are likely to carry a lot of weight with the Board, but IMF Directors could still decide to go ahead with a review this year. In recent SDR reviews, we”note that formal recommendations by the Staff for the review were published in October,” and the Board’s decision finalised by November/December,” HSBC says.

“We believe the RMB has a good chance of joining the SDR in the upcoming review, regardless of whether it happens this year or the next. We have previously said that the SDR review need not
take place every five years and the IMF’s latest proposals support this thinking.

“Given the complexity of the RMB’s potential inclusion in the SDR, the risk was always going to
be that the final outcome could take longer to implement.”  www.hsbc.com (ATI).