The International Monetary Fund has hinted that it may accept the Chinese Yuan as a currency for countries to settle their obligations with the IMF following Argentina's recent debt repayment in yuan.
IMF spokesperson Julie Kozack confirmed on Thursday that Argentina had paid off part of its debts-equivalent to $1.1 billion of the $2.7 billion that matured last month-with the IMF in Chinese currency.
"The RMB is one of the five freely usable currencies that members can and have used to settle their obligations with the IMF," she added, referring to the Chinese currency by its official name, the renminbi.
Argentina's Central Bank signed a deal with China last month to renew the 130 billion yuan swap line for another three years, doubling the amount of freely accessible funds from 35 billion yuan to 70 billion yuan.
On June 29, the bank said it had incorporated the yuan as a currency accepted for deposits in savings banks and checking accounts, signaling a departure from the U.S. dollar as its sole official reserve currency.
Milton Ezrati, chief economist at Vested, a New York-based communications firm, said the deal is an attempt to elevate the yuan as an international currency "The yuan is a long way from an international reserve currency such as the dollar."
"If you are the world's reserve currency, as the dollar is, then traders all over the globe have to hold your currency, because that's the way they do their business. If they hold your currency, they want a place to invest it," he recently told "China in Focus" on NTD. Mr. Erzati contended that in such a case, traders in yuan might face difficulties in securing markets to invest in because China controls the flows of money into and out of the country.
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