After several years of efforts, especially on the part of the Chinese government, the International Monetary Fund (IMF) announced on November 30, 2015 that the Chinese currency, yuan (RMB or人民币), will be included into the Special Drawing Right (SDR) basket, starting in October 2016. The SDR is an artificial currency created in 1969 to implement the U.S. dollar as an reserve asset. The SDR has been used as the unit of account in IMF. Currently, the SDR consists of four currencies: $, €, £, and ¥. These four currencies are also the major reserve currencies held by the central banks. Two questions arise: Is the RMB ready to be a major reserve currency? What are the benefits and costs of being a reserve currency
