China to lift use of SDR in G20 plan
CHINA will widen the use of the International Monetary Fund basket of currencies and help to develop tax collection capability of emerging markets to fight tax evasion by multinational firms, the Chinese finance minister said.
The efforts are two of the 11 major initiatives in the G20 communique to strengthen international financial framework and implement fairer international tax revenue rules.
The IMF executive board in December decided to include the yuan in its Special Drawing Rights basket. Created by the IMF in 1969, the SDR is an international reserve asset to supplement members’ official reserves. The SDR can be exchanged among governments for freely usable currencies in times of need.
“We have facilitated talks to expand the use of SDR,” said Finance Minister Lou Jiwei at a press conference on Saturday following the conclusion of the G20 meeting of finance ministers and central bank governors. “But it is not only a proposal from China. Many members of the G20 share a similar view.”
As of March 17 last year, 204 billion SDRs had been created and allocated to member nations, official data showed. That is equivalent to about US$280 billion, or about 2 percent of the total foreign-exchange reserves of 167 countries.
Lou said the SDR is an efficient tool in pricing as it weakens the risks of a single currency.
“SDR will act more as a pricing tool before it will be actually used in the coming years,” Lou said. “When it comes to actual use, economies will judge the risks for themselves.”
Lou also said China is setting up an international taxation research center to help emerging economies build up their capabilities to stamp out tax evasion by multinational companies.
China has helped in drafting and implementing a global project, Base Erosion and Profit Shifting, — finalized earlier this month — to stop multinational firms from avoiding tax by shifting profits to areas with lower corporate tax.
“We encourage countries to participate in the program and help address the special challenges facing developing countries,” Lou said.
The efforts are two of the 11 major initiatives in the G20 communique to strengthen international financial framework and implement fairer international tax revenue rules.
The IMF executive board in December decided to include the yuan in its Special Drawing Rights basket. Created by the IMF in 1969, the SDR is an international reserve asset to supplement members’ official reserves. The SDR can be exchanged among governments for freely usable currencies in times of need.
“We have facilitated talks to expand the use of SDR,” said Finance Minister Lou Jiwei at a press conference on Saturday following the conclusion of the G20 meeting of finance ministers and central bank governors. “But it is not only a proposal from China. Many members of the G20 share a similar view.”
As of March 17 last year, 204 billion SDRs had been created and allocated to member nations, official data showed. That is equivalent to about US$280 billion, or about 2 percent of the total foreign-exchange reserves of 167 countries.
Lou said the SDR is an efficient tool in pricing as it weakens the risks of a single currency.
“SDR will act more as a pricing tool before it will be actually used in the coming years,” Lou said. “When it comes to actual use, economies will judge the risks for themselves.”
Lou also said China is setting up an international taxation research center to help emerging economies build up their capabilities to stamp out tax evasion by multinational companies.
China has helped in drafting and implementing a global project, Base Erosion and Profit Shifting, — finalized earlier this month — to stop multinational firms from avoiding tax by shifting profits to areas with lower corporate tax.
“We encourage countries to participate in the program and help address the special challenges facing developing countries,” Lou said.
