Thursday, September 22, 2011

Sarkozy Told Obama Yuan Should Be in SDR Basket

Sarkozy Told Obama Yuan Should Be in SDR Basket

French President Nicolas Sarkozy told President Barack Obama that the yuan should be included in the International Monetary Fund’s Special Drawing Rights system, a French presidential official said.

We don't think Mr. Sarkozy is going be able to muscle his way into making such big decisions at the IMF just yet; Christine Lagarde is Obama's baby. Nonetheless, this is a press release to be noted, which we will revisit once we've made sense of it.

As for China's part, unofficially, at least, it's playing coy:

Shen Jianguang, chief economist for greater China at Mizuho Securities Asia Ltd. in Hong Kong, who has worked at the IMF and the European Central Bank, said the push to include the yuan in the SDR basket is “a French idea” that is “meaningless for China” because the yuan needs to be convertible first.

“China wants to do it but do it at their own pace which will minimize financial turmoil,” he said.

Shen said Sarkozy could curry more favor with China by pushing Europe to give the Asian nation market-economy status, something Premier Wen Jiabao asked for last week in a speech addressing increasing Chinese investment in Europe.

“There is nothing for free,” Shen said.


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