Many central banks in Europe have unveiled plans of making yuan part of their foreign currency reserves. They believe that Chinese currency is on the rise and is gradually beating major currencies around the world.
- National Bank of Belgium bought Chinese Yuan worth 200 million euros ($244.5m)
- Slovakia has also bought an unrevealed amount of Yuan.
- The Bank of Spain is considering to invest in Chinese Yuan
This change has started after the European Central Bank converted US dollars worth 500m euros into Chinese Yuan. This was the first major step by any European bank showing utmost confidence in Chinese currency and putting it ahead of the dollar.
Since the International Monetary Fund included Yuan in its Special Drawing Right basket, the position of Yuan has strengthened in the global market. From October 2016 Yuan was the given the place with the elite currencies of the dollar, euro, yen, and pound.
Though Swiss National Bank and the Bank of England have started investing in Yuan and many other banks want to start accepting Yuan currency, many central banks are yet not satisfied. They are still hesitant to hold Yuan part of their foreign reserves.
Sweden’s Riksbank and the National Bank of Slovenia are adamant that they do not hold any Yuan and have no future plans of any investment in the Chinese currency.
After Yuan became part of IMF’s Special Drawing Rights basket, foreign banks have shown interest and inclination towards this currency.
According to the most recent report, until September 2017, international central banks held $107bn worth Chinese Yuan in their federal reserves, this is 19% increase from the year’s start.
In Pakistan, Ahsan Iqbal Minister for Planning and Development said that the government is considering replacing the US dollar with the Chinese yuan in order to boost trade between China and Pakistan.