International Monetary Fund Managing Director Christine Lagarde walks to the podium before a news conference at the G20 Summit news center on Monday. (Photo/China Daily)
The International Monetary Fund is exploring ways to broaden the use of its Special Drawing Rights after the leaders of the G20 reached a consensus on the matter at the G20 Summit in Hangzhou to enhance the resilience of the international financial system, IMF chief Christine Lagarde said on Monday. [Special coverage]
"The IMF was really encouraged by the determination of China to use the SDR as a yardstick to measure reserves and as a currency for bond issuance," Lagarde told reporters at a news conference after the conclusion of the summit.
The call for greater use of SDR, a synthetic reserve currency administrated by the IMF, has been strongly backed by China as the country has been working to lift the global profile of its currency. The yuan will be officially included in the IMF's currency basket on Oct 1.
Lagarde vowed that the IMF will continue to expand the representation of emerging and developing economies in the organization as it needs to serve the entire membership.
The IMF chief also reiterated that the Chinese currency meets the criteria for the inclusion in the SDR as the Chinese monetary authority has made "constructive progress" by making its monetary policy more market-determined.
Experts said that the expansion of the use of the SDR will help improve the stability of the global financial system and the inclusion of the Chinese currency will in turn empower the influence of the SDR in international markets.
"The yuan's inclusion in the SDR will, to some extent, increase the influence of the SDR and enable it to play a greater role in the international financial markets," said E Zhihuan, an academic committee member at the International Monetary Institute of Renmin University of China.
The World Bank issued a landmark bond denominated in the IMF's SDRs in the Chinese interbank market last week.
World Bank President Jim Yong Kim said earlier that issuance of SDR bonds in China would support the G20's objective of expanding the use of the SDR, which has been listed as one of the G20's key financial tasks.
At Monday's news conference, Lagarde also said that the G20 leaders have endorsed several initiatives to support stability and resilience of the international financial architecture, which included the support for further strengthening of the global financial safety net with an adequately financed IMF equipped with a more effective tool kit.
"Global financial governance has been a big topic. After the January surge in market volatility, cooperation between countries has improved greatly and the G20 has been a suitable venue to cement the ties in that regard," said Hong Hao, chief strategist at BOCOM International Holdings in Hong Kong.