Considerations of the yuan as a reserve currency - BBH
|Analysts at Brown Brothers Harriman explained that with the Chinese yuan now included in the IMF's SDR, starting with Q3 COFER data, which will not be available until the end of March 2017, the IMF will break out the yuan's share of global reserves.
Key Quotes:
"Currently, the yuan is included in the omnibus "other currencies" category. At the end of Q2, the "other currencies" account for about 3.04% of allocated reserves, down from almost 3.2% in Q1 16.
A year ago, when the IMF announced its decision to include the yuan in the SDR, it estimated that about 1% of global reserves were in the yuan.
We are not convinced that inclusion of the yuan in the SDR will necessarily increase the use of the yuan as reserve assets.
The security, liquidity, and transparency of the yuan and the central government bond market (where reserves are expected to be invested) are important considerations.
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