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Sarkozy Told Obama China’s Yuan Should Be in Special Drawing Rights Basket
Moving toward including the yuan in the SDR basket has been a goal of Sarkozy’s this year as France seeks to shape the international financial system during its one-year leadership of the Group of 20 major world economies. Including the yuan in the SDR, a unit of account derived from the value of the dollar, yen, pound and euro, would further integrate the Chinese currency into world markets.
The official, speaking to reporters in New York after Sarkozy met Obama, said France would push for the yuan’s inclusion in exchange for increased consumption and trade from China in order to stimulate the global economy. The official spoke on condition of anonymity in line with government rules.
The official didn’t say if a timetable for the yuan’s inclusion in the SDR was discussed. The Special Drawing Rights basket is reviewed every five years by the IMF’s executive board, and the most recent changes took effect in January.
Sarkozy proposed at a one-day seminar in Nanjing in March that the yuan should be included in the SDR. European Central Bank President Jean-Claude Trichet said then that the idea was “worth discussing.” U.S. Treasury Secretary Timothy F. Geithner at the same meeting said that “flexible exchange rate systems” and free capital flows were prerequisites for inclusion into the basket. China has neither.
France has continued to push the issue. Finance Minister Francois Baroin last month told reporters in Beijing that a working group had been set up to address issues related to the yuan’s eventual inclusion in the SDR basket........
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