The International Monetary Fund admitted China’s yuan — also known as the renminbi — into its benchmark currency basket on Monday, in a victory for Beijing’s campaign for recognition as a global economic power.
The move will help pave the way for broader use of the yuan in trade and finance. Just four other currencies — the dollar, the euro, the pound and the yen — have the IMF designation.
But the path to the IMF decision, a bumpy process taking place over years, also introduced new uncertainty into China’s economy and financial system, says The New York Times.
To meet the IMF requirements, China was forced to give up some of its tight control over the currency, culminating in the abrupt devaluation of the yuan that shook global markets in August.
And the changes could inject new volatility into the country, at a time when its economy already is slowing.