MEXICO CITY (Reuters) - The Chinese Yuan is “quite a ways” from becoming a global reserve currency despite inclusion in the International Monetary Fund’s currency basket, and China needs further reform to reach that goal, U.S. Treasury Secretary Jack Lew said on Thursday.
On Oct. 1, the Yuan, also known as the renminbi, will join the dollar, euro, yen and British pound in the “special drawing rights” basket that forms the IMF’s unit of account.
While recognizing “enormous” change in China in the last 10 years that had made the currency more open, Lew said the country still had work to do on economic reform.
“Being part of the SDR basket at the IMF is quite a ways away from being a global reserve currency,” he said in a conversation with students in Mexico City.
“In my dealings with our counterparts in China, I recognize that they have laid out a reform program that would get China where it needs to go, but I pressed them very hard that they need to implement that program to experience the results,” Lew said.
Asked by a student what impact the inclusion of the Yuan in the IMF basket would have on the United States, Lew said the broad use of the U.S. dollar as a world reserve currency was a singular aspect of the U.S. economy, along with the liquidity and depth of its treasury markets.
Reporting by David Lawder and Frank Jack Daniel; Editing by David Gregorio