The European Central Bank has converted €500m of its reserves into renminbi for the first time, in a move that will diversity its foreign exchange holdings and boost the international role of the Chinese currency.
In a statement on Tuesday, the ECB confirmed it had completed the investment following a decision by its governing council in January.
The central bank said the move reflected “the importance of China as one of the euro area’s largest trading partners”.
China’s currency has been making inroads with its internationalisation in a bid to become one of the world’s major reserve currencies. Last year, the International Monetary Fund approved the renminbi’s inclusion into its elite basket of currencies which make up the fund’s own de facto exchange rate, known as the “special drawing rights”.
A bulk of the ECB’s foreign exchange reserves are held in US dollars, and also include Japanese yen, SDR, and gold.
The ECB said the renminbi investment left the overall size of its reserves unchanged. The transaction was completed by converting a portion of the ECB’s dollar holdings.
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