In anticipation of the International Monetary Fund accepting the Chinese yuan into its foreign exchange basket, the People’s Bank of China began to register the first group of international financial institutions allowed to enter China’s interbank foreign exchange market.

People’s Bank of China

Of the seven that have been registered, three are central banks: Hong Kong Monetary Authority, Reserve Bank of Australia, and National Bank of Hungary, the People’s Bank of China said in a statement on its website.

The remaining four institutions admitted to the domestic market are the International Bank for Reconstruction and Development, International Development Association, Trust Funds of World Bank Group, and Government of Singapore Investment Corp.

The IMF is expected to make the highly anticipated announcement including the yuan in its exclusive Special Drawing Rights basket on Monday. This would put the yuan on par with the US dollar, the Japanese yen, the British pound and the euro.

The PBOC said that the institutions would now be allowed to trade spot products, forwards, swaps, currency swaps and options in the country’s domestic foreign exchange market.

In July, the PBOC decided to permit long-term foreign investors the ability to trade in the interbank market and removed limits on the size of investments. In September, China issued detailed rules on letting foreigners participate in the interbank foreign exchange market.

Granting foreign investors greater access to its capital markets is a long-running theme in China’s quest to reform its economy and turn it into one more reliant on free markets, and less dependent on central planning

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