Economists are claiming that in the coming years, more central banks across the globe will likely hold assets in Chinese currency in a bid to diversify their foreign exchange reserves.
In a recent poll, reserve managers around the world predicted that by 2025, about 10 percent of the global foreign exchange reserves will be in yuan. The figure, according to a research note from the banking and finance giant HSBC, is an increase from the current 0.3 percent.
Additionally, experts are betting that the yuan will soon be included in the Special Drawing Rights of the International Monetary Fund (IMF).
Should the drawing rights be granted by the end of November, the yuan will be the fifth global currency after the U.S. dollar, the euro, the Japanese yen and the British pound.
According to an IMF statement, the yuan earning support from the fund's staff is a signal that the Chinese currency can be freely used and is stable as a value storage.
Louis Kujis, an economist at the Oxford Economics, said that the "inclusion, which is very likely, confers international credibility."
"It will probably make central banks, sovereign wealth funds and other financial market participants more comfortable to hold [yuan] denominated assets, although this will happen gradually," Louis added.
IMF Managing Director Christine Lagarde also noted that she backs the findings that the Chinese government has already "addressed all remaining operational issues identified in an initial staff analysis submitted to the executive board in July."
The country's central bank, the People's Bank of China, recently issued a statement saying that the inclusion "would increase the representativeness and attractiveness of the SDR, and help improve the current international monetary system, which would benefit both China and the rest of the world."
Meanwhile, the IMF revealed that as of the end of the second quarter, U.S. dollars accounted for 63.7 percent of the global total of foreign exchange reserves, a decrease from the previous quarter's 64.1 percent.