Yuan now becomes a global player in trade and finance with the inclusion of their currency in the International Monetary Fund. The IMF will now use the Yuan along with the Dollar, the Yen, and the Pound to officially lend these currencies in emergency bailouts. With this stamp of approval, the Yuan has earned its legitimacy for global internationalization.
The Yuan or Renminbi has shown China’s financial diplomacy evolving from heavy-handed aid to governments. But this inclusion is more of a symbolic event than a market shaping change for the finance world. China has shown the world a symbolic victory of the second largest economy in the world.
Before meeting IMF’s criteria for inclusion of their currency, Beijing over the past 5 years has turned a trickle of yuan-denominated transactions from a borrower of development assistance to a net lender. Beijing has also secured nearly every major international financial institution, including senior executives at the IMF.
Many economists are doubtful, that the Chinese currency will break Washington’s economic dominance. In fact, many argue that the main reason why the dollar is the most used currency in most of the world transactions and currency reserves is because it is considered to be the most secure economy in the world.