China expects the renminbi to be fully convertible by 2018, with interest rates fully liberalized this year, the Hong Kong Economic Journal reported Tuesday.
Beijing is ramping up reform of its capital account in the run-up to a review of the special drawing rights (SDR) program by the International Monetary Fund (IMF) later this year.
Chinese officials are pushing for the renminbi’s inclusion in the currency basket, the report said, citing Liao Qun, chief economist of CITIC Bank International.
SDR is an international reserve asset created by the IMF in 1969 to supplement its member countries’ official reserves. It consists of the US dollar, euro, Japanese yen and pound sterling.
Liao said only five of 40 items in China’s capital account are not convertible, all of which relate to personal cross-border investment and issuance of securities and other financial products to non-residents.
He said the renminbi has a 10 percent upside in the next two to three years as China pushes for SDR inclusion and seeks a place for A shares in MSCI, a global stock index.
However, Liao said there is only a 60 percent chance that the renminbi will make it to SDR this year given continued opposition from the United States.
Translation by Vey Wong
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