On May 31^st, the Seminar on SDR and Reform of the International Monetary System and the Macro-Finance Salon (No.185) was held as an online closed-door meeting, with the International Monetary Institute (IMI) of Renmin University of China (RUC) and the International Finance Forum (IFF) Institute as co-hosts.

Keynote Speeches were delivered by Lin Jianhai, Deputy Chairman of Council, IFF; Former Secretary General, IMF; and Zhang Liqing, Member of the IFF Academic Committee; Director, Center for International Finance Studies；Former Dean, School of Finance, Central University of Finance and Economics. The seminar was also joined by Chen Weidong, Member of the IMI Academic Committee; Dean, Academy of Bank of China; Song Min, Dean, IFF Institute; Dean, Economics and Management School, Wuhan University; Tu Yonghong, Deputy Director, IMI; Dean, Yangtze River Economic Zone Research Institute, RUC; and Wei Benhua, Former Deputy Administrator-in-bureau, SAFE; Former IMF Executive Director for China. The seminar was chaired by Zhang Zhixiang, Former Director-General, International Department, PBoC; Former IMF Executive Director for China.

In his keynote speech, Lin Jianhai shared his views on the role of SDR in the international monetary system and on the significance of valuation review. He argued that SDR is a new international reserve asset created within the IMF framework to supplement the official reserves of member states. RMB’s raised weighting in 2022 was mainly due to the continued increase of China’s share in global export. The lifted weighting of RMB marks the recognition for China’s achievements in reform and opening up, a new phase of IMF’s continued efforts to improve the international monetary and financial system, and a driving force for RMB internationalization. Although there were proposals that SDR should be designated as a super-sovereign reserve currency, such an initiative is not feasible given the current situation, as it remains a difficult problem of political economics to achieve consensus in the international community, develop relevant laws and regulations, and build an operational framework. When it came to the prospect of RMB internationalization, Lin pointed out that China should do the following: first, ensure sustained economic growth; second, maintain the high-level reform and opening up; third, improve the financial system and boost further development of the financial market; fourth, make sure the exchange rate regime is flexible; fifth, enhance the role of RMB in cross-border trade denomination and settlement.

Zhang Liqing shared in his keynote speech the future of the international monetary system and RMB internationalization. He pointed out that the current international reserve system had two fundamental flaws: instability and inequity. Reserve currency diversification is the most feasible and desirable solution for the proposed reform of the international monetary system, which can contribute to the healthy development of fiscal and monetary policies of major economies and uphold global economic and financial stability. In terms of promoting RMB internationalization, he proposed five measures of ensuring sustained and stable economic growth, promoting domestic financial market reform, accelerating the two-way opening of capital accounts, continuing market-oriented reform of the RMB exchange rate and improving the legal system and ease of doing business.

During the seminar, Chen Weidong suggested that nowadays the basis of global common development and shared governance was changing and there was an imbalance between the SDR allocation and actual demands. Against this backdrop, the allocation determination, composition and usage of the SDR need to be further studied. In the long run, the promotion of RMB internationalization should rely on the market power which depends on the competitiveness of Chinese products and enterprises. Song Min believed that the rising weighting of the RMB in the SDR was the result of China's trade growth, financial openness and enhanced global influence. He also noted that it was a comprehensive reflection of the growth of China's real economy and the importance of trade exports. The current weighting rise is mainly attributed to trade and investment while the importance of finance has not yet been brought into play. Further opening of the financial market may well bring about a non-linear but rapid increase in the weighting of the SDR. Tu Yonghong put forward three suggestions on RMB internationalization and the RMB exchange rate: to accelerate high-quality development in the future and further consolidate the economic foundation of RMB internationalization; to seize new opportunities brought by the RCEP and the Belt and Road Initiative while expanding channels of RMB usage; to pay great attention to short-term capital flows and maintain the relative stability of RMB exchange rate against the backdrop of generally balanced international payments. Wei Benhua mentioned that it was impossible now to develop the SDR into a major reserve asset since it meant that sovereign countries would hand over the dominant role in deciding monetary policies from the U.S. to the IMF. The overall goal based on the current reality is still to develop an international monetary system supported by currency diversification. Although the status of the U.S. dollar is gradually weakening, it will continue to play a large role for quite a long period. As for the RMB, it is in a process of relatively rapid rise. In the long run, there is a certain basis for establishing a stable system supported by a triangle structure of the dollar, the euro and the yuan.