Chinese RMB to become a global reserve currency from October 2016

The RMB will account for 10.92% of the value of the 'special drawing right' (SDR) basket alongside the US dollar, accounting for 41.73%; the euro, accounting for 30.93%; the Japanese yen, accounting for 8.33%; and the British pound, accounting for 8.09%.

The SDR is an international reserve asset, which was created by the IMF in 1969 to supplement its member countries' official reserves. Its value is currently based on a weighted average of the values of a basket of four major currencies. IMF member countries in financial difficulty have been issued with 204.1 billion SDRs as of 30 November 2015. SDRs can be exchanged for any 'freely usable' currency, and interest is charged based on the relative weightings of the currencies in the SDR basket.

IMF managing director Christine Lagarde said that the decision to include the RMB in the SDR basket was an "important milestone" for the Chinese economy. It would also "enhance the attractiveness" of the SDR itself by making it more representative of the world's major currencies, she said.

"It is also a recognition of the progress that the Chinese authorities have made in the past years in reforming China's monetary and financial systems," she said.

"The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy," she said.

Authorities of all currencies represented in the SDR basket are expected to maintain certain financial policy standards. In a statement, China's central bank the People's Bank of China (PBoC) said that it would "continue to deepen and accelerate economic reforms and financial opening up, and contribute to promoting world economic growth, safeguarding financial stability and improving global economic governance".