IMF’s Gopinath says China needs open capital markets for yuan to be global currency

WASHINGTON: If China wants its yuan to become a globally used currency, Beijing would need to have open capital markets and full currency convertibility, the International Monetary Fund’s No. 2 official said on Tuesday.

IMF First Deputy Managing Director Gopinath, speaking about the IMF’s new institutional view on capital flow measures at a Peterson Institute for International Economics event, said history has shown that reserve currencies widely used in global trade transactions, such as the dollar and the British pound, do not have capital restrictions, as China does.

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“If a country is aspiring to be a global currency, then in that case, you would need to have, you know, basically fully and freely mobile capital, full capital account liberalization, full convertibility of exchange rate, which is not the case right now in China,” Gopinath said in response to a question on China’s capital restrictions.