Renminbi needs to be liquid to be reserve currency: Weidmann

BERLIN (Reuters) – China’s renminbi needs to be liquid and freely convertible to be a major reserve currency but could be included in the International Monetary Fund’s global currency basket if these conditions are met, Bundesbank chief Jens Weidmann told Reuters.

Analysts say Beijing has made huge strides in recent years in its push for more formal international recognition of the renminbi.

The Special Drawing Rights (SDR) currency, the IMF’s official unit of account, currently comprises U.S. dollars, the euro, British pounds and Japanese yen.

“The renminbi must be liquid and freely convertible to be an international reserve currency. This is not completely the case at the moment,” Weidmann told Reuters in written responses to questions ahead of next week’s meeting of finance ministers and central bank chiefs from the Group of Seven industrial nations in Dresden, Germany.

“But if these conditions are fulfilled, there is no argument against if the IMF then takes the renminbi into the SDR currency basket.”

(Reporting by Gernot Heller; Writing by Paul Carrel; Editing by Michelle Martin)