[Explanation] On August 1, the new Special Drawing Rights (SDR) currency basket officially took effect, and the weight of the RMB was raised from 10.92% to 12.28%.
The weight of the US dollar was raised from 41.73% to 43.38%, while the weight of the euro, yen and pound was lowered from 30.93%, 8.33% and 8.09% to 29.31%, 7.59% and 7.44% respectively, and the weight of the renminbi remained in third place.
What does SDR do?
What is the positive impact of the increase in the weighting of the RMB SDR?
Experts say the SDR is a reserve asset and unit of account created by the International Monetary Fund (IMF).
The purpose is to control risk and enhance the liquidity and resilience of the market in the event of emergencies.
[Concurrent] Liu Zhiqin, senior researcher at Chongyang Institute of Financial Studies, Renmin University of China
My personal understanding is that the International Monetary Fund has set up a "small treasury" for the international currency market, and the purpose of this "small treasury" is to control risks.
In the event of an emergency where capital turnover is poor and debt compensation between governments is not smooth, the International Monetary Fund has its own "small treasury" that can provide money to make up for market liquidity and (enhance) the market toughness.
It is public, legal, and recognized by member states.
Therefore, this money is extremely important and critical to many developing and underdeveloped countries, and it often plays a life-saving role at critical times, which is a very good positive effect.
[Explanation] The weight of RMB was increased from 10.92% to 12.28%, an increase of 1.36 percentage points.
How is 1.36 percentage points calculated?
Experts said that the rough calculation method is based on the analysis of China's performance in various fields in the past five years.
[Concurrent] Liu Zhiqin, senior researcher at Chongyang Institute of Financial Studies, Renmin University of China
Because he recalculates and redistributes every five years, according to the performance of various fields in China in the past five years, it is basically the performance of five fields.
Our share of China's exports of goods and services has risen.
Our reserve assets have also been greatly improved, especially the reserves of US dollars and other currencies. We, the People's Bank of China, have always made steady progress.
(Also) the proportion of our RMB in foreign exchange transactions in the international currency market.
That is, if your performance is good, you will get extra points, if your performance is poor, you will be deducted points. Finally, an average score is calculated, which is the main source of our 1.36 percent this time.
From this calculation (result), we can see that in the past five years, China has greatly increased the proportion of its reserve assets and foreign exchange transactions, whether it is the export of goods or services.
[Explanation] Experts said that the increase in the weight of the renminbi in the SDR indicates that the international status of the renminbi has been further enhanced and respected, not only because of the gradual increase in the increment and proportion of the renminbi in the international market and trading market, but also because of the stability of the renminbi.
[Concurrent] Liu Zhiqin, senior researcher at Chongyang Institute of Financial Studies, Renmin University of China
It is reflected in two points, that is, the increment and proportion of RMB in the international market and trading market are gradually increasing.
Second, especially our stability, because our renminbi has not experienced major ups and downs in international trade and international markets, nor has it experienced great fluctuations due to strong winds and waves.
We have maintained a certain degree of stability. What we call this is called concentration, which is a great comfort and encouragement to the international market, especially the confidence of the international market.
The stable development of the RMB and its outstanding performance in the market are indeed a beautiful sight for the international market, and it is a currency worthy of expectation and trust.
Reported by Chi Hanyu in Beijing
Responsible editor: [Ji Xiang]