The renminbi is likely to be included in the Special Drawing Rights (SDR) currency basket by the International Monetary Fund (IMF) after a scheduled review in October, Anthony Neoh said.
The former chairman of Hong Kong’s Securities and Futures Commission (SFC) expects the renminbi to gain approval in principle.
But he said it would take time and more work before it could become a true component in the SDR, an international reserve asset currently incorporating the US dollar, euro, British pound and Japanese yen.
He made the remarks after a forum in Hong Kong Monday on offshore renminbi.
The criteria the IMF uses to select currencies for inclusion in the SDR basket are the size of the country’s exports and whether its currency is freely usable or convertible.
The latter is the key obstacle for the renminbi.
Mainland Chinese media reported that an IMF working team will be visiting the People’s Bank of China’s Shanghai head office and other authorities this week to discuss related technical issues, such as the Shanghai interbank offered rate system.
Neoh said the challenges for the renminbi to be an international currency are about increasing the volume of yuan in circulation in offshore markets, creating more renminbi-denominated financial instruments and maintaining confidence in China’s stable development.
It is necessary for China to deepen its bond market, and Hong Kong needs to step up financial innovation in renminbi business and products to strengthen its position as the main offshore renminbi center, he said.
In other comments, the former SFC chairman said the Shenzhen-Hong Kong stock connect scheme may be launched before the Oct. 1 national holiday.
Regarding the rumored further opening up of the qualified domestic institutional investor scheme to domestic individual investors, he said it’s an inevitable trend and is very likely to occur.
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