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On the inclusion of the Chinese renminbi in the SDR basket

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Abstract

We study the impact of a broadening of the SDR basket to the Chinese currency on the composition and volatility of the basket. Although, in the past, RMB inclusion would have had negligible impact due to its limited weight, a much more significant impact can be expected in the next decades, and more so if the Chinese currency is pegged to the US dollar. If the objective is to reinforce the attractiveness of the SDR as a unit of account and a store of value through more stability, then a broadening of the SDR to the RMB could be appropriate, provided some flexibility is introduced in the Chinese exchange-rate regime. This issue of flexibility is de facto more important than that of “free usability†to make the SDR more stable, at least in the short and medium run

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  • Agnès Bénassy-Quéré & Damien Capelle, 2012. "On the inclusion of the Chinese renminbi in the SDR basket," Documents de travail du Centre d'Economie de la Sorbonne 12079, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    • Handle: RePEc:mse:cesdoc:12079
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    Cited by:

    1. Jin, Jiayu & Han, Liyan & Xu, Yang, 2022. "Does the SDR stabilize investing in commodities?," International Review of Economics & Finance, Elsevier, vol. 81(C), pages 160-172.
    2. Ito, Takatoshi, 2017. "A new financial order in Asia: Will a RMB bloc emerge?," Journal of International Money and Finance, Elsevier, vol. 74(C), pages 232-257.
    3. Li, Jingwen & Wang, Yue & Song, Yubing & Su, Chi Wei, 2023. "How resistant is gold to stress? New evidence from global supply chain," Resources Policy, Elsevier, vol. 85(PB).
    4. Shekhar Hari Kumar & Vimal Balasubramaniam & Ila Patnaik & Ajay Shah, 2020. "Who cares about the Renminbi?," 2020 Papers pha1373, Job Market Papers.
    5. DRAGOE Sebastian-Ilie, 2014. "Global Financial Crisis And The International Monetary System," Revista Economica, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 66(1), pages 71-90.

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    More about this item

    Keywords

    SDR; renminbi; international monetary system; foreign exchange volatility;
    All these keywords.

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions

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