Importance of Adding RMB to SDR

Economics, FREEPOM

Each week now brings more confirmation of the analysis put forward here on POM over the last 18 months.  This recent article from the South China Morning Post echoes a post made here last December in regards to the advantages and reasons why the West will need to support the inclusion of the RMB in the SDR.

From the SCMP article:

“Therefore, the west, led by the U.S., should welcome the RMB’s inclusion into the SDR. History will vindicate that this fall’s seemingly trivial decision by the IMF on the SDR is destined to become a boon for the western world in the long run.”  

And more:

“However, China’s reformers believe the RMB’s election to SDR status will have a lock-in effect on China’s capital account liberalisation which will then accelerate domestic financial liberalisation and financial services opening up to the rest of the world. They view China’s SDR inclusion as just as important as China’s accession into the World Trade Organisation in 2001.”

Readers of the POM analysis and conclusions will recognize the trend in information and real world events which are beginning to align across the macroeconomic spectrum.

For additional information on the benefits to the US see POM post USD Needs Yuan in SDR Basket.

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