SDR Entry Marks Beginning, Not End, of China's Arrival on World Financial Platform

On Oct. 1, the International Monetary Fund (IMF) will confer a stamp of recognition on China's status as a key global financial system player, adding the yuan as its fifth Special Drawing Right (SDR) currency. A lot has been achieved to get to this point, but entry is not where it ends.

Yuan-denominated assets will now be assessed in a more favorable light by global reserve managers managing $10.9 trillion in foreign exchange reserves. But how much of that goes into yuan assets will depend on whether China's asset markets are developed or deepened enough to satisfy investors' four golden criteria: capital preservation, liquidity, yield, and balance of asset allocation.