Zhou Xiaochuan, the governor of the Central Bank of China revealed in an interview with Bloomberg this week that the yuan is already being used as a reserve currency by some countries, though they “may not be willing to say so.”
The interview was conducted during the International Monetary Fund meetings in Washington.
Since the Great Recession of 2008, China has been making aggressive moves away from the dollar and to establish the renminbi as an international reserve currency. “It’s good that more countries are willing to adopt the renminbi as a reserve currency as our economy grows and our financial reforms continue,” said Zhou.
Next week the European Central Bank will meet to discuss holding the yuan as part of its reserves.
The yuan has risen 11% against the dollar since 2009, the most of any other currency.
Zhou said there was still some work done to promote the global use of the yuan, including making it “freely convertible” and extending efforts to “respect market demand and supply and maintain financial stability,” which could be interpreted that the yuan will be backed by the gold standard.
It is not known when or if the yuan will be included in the IMF’s currency basket of Special Drawing Rights. PBOC deputy governor Yi Gang said “a canal is formed when water comes” and that it will happen when conditions are right. Currently the basket consists of the pound, the euro, the yen, and the dollar.
Yi added that “those working at the IMF are clearly aware of the market’s demand and choices for the yuan use.”
Earlier this month the U.K. began sales of its first-ever yuan-denominated bond. Previously bonds were only sold in the pound or the dollar.