Oil, Wheat and Currencies

A study carried out by Robert Triffin International (RTI, 2014) entitled Using the SDR as a Lever to Reform the International Monetary System, supplementing the Palais Royal Initiative presented at the G20 in 2011, has showed that the trend towards a multi-currency monetary system requires cooperation between the IMF and central banks. The first step in this trend came to fruition on October 1 last year with the inclusion of the renminbi in the SDR basket. The second step, consisting in extending SDR issuance not only for Official SDRs but also for Market SDRs – as happened with the ECU before the creation of the euro –, was first implemented with the World Bank’s SDR two billion (USD 2.8 billion) issuance programme on the Chinese market. This was made in agreement with the People’s Bank of China, and the first tranche, equal to SDR 500 million (USD 700 million), was issued in September 2016. Therefore, the World Bank’s SDR issuance provides a diversification opportunity for China’s and other countries’ savings and investment opportunities in renminbi.