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IMF reforms could shrink yuan's debut share of reserve currency basket

The International Monetary Fund may reconfigure how its reserve currency basket is weighted, resulting in the Chinese yuan likely debuting with a smaller share, Reuters reported, citing two unnamed sources. Under the potential revisions, export volumes would be less important and financial flows would be emphasized, granting the yuan a lower share than the dollar, euro, pound and yen. IMF staff said in July there were “significant shortcomings” with the current methodology – which dates to 1978 – including that it did not take into account a subsequent large increase in financial flows. The IMF will decide on the composition of the basket on November 30.

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