IMF Decides To Report Yuan Separately In Survey of COFER

The International Monetary Fund (IMF) has announced that starting October 1 it will report China’s yuan separately in its foreign currency reserves report which is entitled Composition Of Foreign Exchange Reserves (COFER).

The IMF had included the yuan in its foreign exchange basket Special Drawing Right (SDR) in November 2015. It had at that point in time stated that it was vital that existing data gaps be addressed before the next SDR review which is usually held every five years.

The decision to include the yuan into the COFER survey is an attempt towards removing some of the data gaps. The survey presents the currency composition of foreign exchange reserves holdings of 188 IMF members. The report is published quarterly and participation is voluntary.

In keeping with its intention to improve transparency, China reported its foreign reserve portfolio to the IMF for the first time in September 2015. COFER currently reports seven currencies separately: the U.S. dollar, the Japanese yen, the pound sterling, the Canadian dollar, the Australian dollar, the Swiss franc and the euro. All the other currencies are shown as an aggregate.

With this inclusion of yuan, members of the IMF will be able to report their official reserves that are being held in yuan in the COFER survey.

In a statement IMF said,

IMF member countries will be able to record as official reserves their holdings of RMB−denominated external assets that are readily available for meeting balance of payments financing needs.

The Fund took the decision on February 26 to effect the change in data collection from October onwards so as to provide sufficient lead time for countries to gather and report data for yuan-denominated reserves. The first COFER report that will separately identify foreign exchange reserves held in yuan will be published at the end of March 2017, containing the results of the survey for the fourth quarter of 2016.

The IMF has clarified that since the COFER does not include holdings in the currency of the issuing country, China’s reserves held in yuan will not be reported.

According to IMF, the decision to add the reporting of yuan is a move to recognize the internationalization of China’s currency which has been given an impetus by the government’s reforms to move towards a market-led economy. It is also likely to further boost China’s efforts to promote a bigger role for its currency in the global economy.

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