Eurozone States Including Slovakia Put Chinese Yuan in FOREX Reserves

Bratislava, February 8 (TASR) – China’s yuan currency is becoming part of the foreign-exchange (FOREX) reserves held by eurozone countries, and following the European Central Bank (ECB) and the German Bundesbank, Slovakia is next to include Chinese assets in its FOREX reserves.

“The National Bank of Slovakia (NBS) is investing part of its FOREX reserves in the Chinese Government bond market,” Slovakia’s central bank spokesperson Martina Vrablik Solcanyiova has told TASR.

According to economists, the yuan is evidently becoming one of the world’s major reserve currencies, like the US dollar and the euro. “The 21st century will belong to China. It will soon become the world’s largest economy, and so it’s a logical step for the Bundesbank and the ECB to include the yuan in their FOREX reserves within their diversification strategies,” J&T Banka analyst Stanislav Panis told TASR, adding that the yuan’s introduction in Special Drawing Rights (SDR), an artificial clearing unit created by the International Monetary Fund (IMF), was a big milestone.

“Trading in the yuan has been agreed on in many international transactions before. However, there is still a long way to go for [the currency]. It’s enough to mention the constantly present capital checks, which are a huge hurdle and are preventing the yuan from occupying an even more significant position,” stated Panis.

The ECB decided to include the yuan (€500 million worth) in its FOREX reserves in June 2017. Vladimir Vano, an economist from CentralNic group, claims that this is still a relatively low financial volume given the total FOREX reserves and the size of the Chinese economy. “Similar steps logically reflect not only China’s growing importance in international trade and in the global financial system, but also gradual developments in the way that China is perceived and the stability of its economic and financial system,” Vano told TASR.