ECONOMICS, FREE POM

ANALYSIS OF RECENT IMF REPORT ON SDR ADJUSTMENTS (FREEPOM)

AUGUST 5, 2015    By JC Collins

NOTE:  Authorization is given to re-post this material so it reaches the widest possible audience.  Please just link back to the POM site and give credit for the work.  There is much confusion and misleading information being presented regarding the changes to the monetary framework.  The more this process is understood the more people can prepare and financially plan.

With yesterday's announcement from the IMF that a recommendation has been made to delay the effective date of the new SDR basket, which would include the Chinese renminbi, by 9 months, it becomes important that we take this opportunity to review the facts which have been presented here on POM over the last 19 months, and bring a sense of understanding to the issue.

The first thing to extract from the IMF statement yesterday is that the recommendation was not to exclude the RMB, but only delay the effective start date of the new basket.  Sites, such as Zero Hedge, have been quick to put out articles with titles stating that the IMF has delayed the addition of the RMB.  

This is misleading as the recommendation was based on the effective date of the new basket, as opposed to the vote on including the Chinese currency.
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