What is the significance of entering the basket? In fact, RMB and SDR learn from each other and achieve a win-win situation. The original intention of SDR design is to become an international reserve currency to replace the US dollar, but it has not been accepted by the market since it came out, and no major currency country is willing to endorse its value marketing with real money and silver. During the G20 meeting in London in 2009, President Zhou Xiaochuan pointed out that China was studying the market application of SDR, and the international community responded to this.

In the process of RMB joining SDR, China supported the expansion of SDR application in the international market with practical actions. From April 2065438 to April 2006, the People's Bank of China published the data of foreign exchange reserves in US dollars and SDR as reporting currencies. Governor Zhou Xiaochuan also said that the central bank is studying issuing bonds denominated in SDR in China. In view of the size and weight of China's economy, China may promote the SDR to play a meaningful role as an international reserve currency in the near future.

The advantage of China's doing this is that there are structural defects in the current international monetary system, and the dominance of the US dollar has brought more and more risks and instability, which has become a major challenge to the sustained and stable growth of the world economy, and reform is imperative. However, the reform will touch the "core interests" of the United States and other countries, which will hurt the bones and affect the whole body. The issue of reform has been discussed for many years and has been stagnant.

SDR basket is very inclusive, and it is an acceptable scheme for many parties to promote the reform of the international monetary system by promoting the application of SDR. This is also the reason why the SDR resistance of RMB entering the basket is small.

All parties have made some compromises and accepted the RMB into the basket, among which the support of Europe is more crucial. The euro and the pound are willing to "cut the meat in chunks", and France supports the revision of the relevant rules of "free convertibility" so that the RMB can meet the technical requirements for entering the basket. These moves reflect that Europe has a great sense of urgency in promoting the reform of the international monetary system and is willing to let the RMB play a more active role in the international arena and promote the balance of the international monetary system. In the future, taking the RMB into the basket as an opportunity, we will strengthen coordination and cooperation with Europe and play a greater role in establishing a more just and reasonable international monetary system and improving international financial governance, so as to repay the expectations of the international community and realize the ambition of RMB internationalization.

This article is taken from Liao: What does it mean for RMB to join SDR?