Group of Seven (G-7) countries started out with a tough-love approach to China's pursuit of reserve-currency status for the yuan: Take the difficult steps, and we'll support you. As the decision nears, the united front may be softening.
The International Monetary Fund (IMF) is reviewing whether the yuan should be included in its Special Drawing Rights (SDR), a basket of reserve currencies used by the fund as a unit of account. While many analysts have predicted approval, a unified G-7 would have the power to block inclusion, denying China the global prestige of standing alongside the dollar and euro in the basket.
At a May meeting of G-7 finance chiefs in Dresden, Germany, German Finance Minister Wolfgang Schaeuble said the group welcomed the yuan's inclusion "in principle" as long as the decision aligns with IMF standards. Individual nations' recent comments have taken on different shades of favorableness toward approval.
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