The National Bank of Serbia (NBS) has confirmed that it is considering the possibility of keeping part of its foreign exchange reserves in the Chinese currency yuan, RFE/RL reports.
"Taking into account the high level of foreign exchange reserves, the fact that the yuan is included in the currency structure of Serbia's external debt, as well as the internationalization of the yuan and its increasing importance in global payments and on the international financial market, the National Bank of Serbia is one of the options for expanding the investment universe considered investing part of the foreign exchange reserves in assets denominated in yuan", announced the National Bank of Serbia.
Serbian President Aleksandar Vučić announced this possibility on October 18 in Beijing at the "Belt and Road" international economic forum.
"Since January 2015, the Chinese yuan has been on the list of our currencies for the international market, and the NBS is considering including the Chinese currency in its foreign exchange reserves," Vučić said on Wednesday.
He added that China is Serbia's second largest foreign trade partner and that trade between the two countries has grown 10 times over the past 185 years.
The NBS stated for N1 that a decision on this has not yet been made.
"The National Bank of Serbia is in the process of securing the necessary preconditions, i.e. infrastructure, for inclusion in the Chinese bond market, and concrete decisions on investing a certain part of foreign exchange reserves in financial instruments denominated in yuan will, as in all other cases, be made with careful consideration and analysis of all the necessary factors", specified the NBS.
The Serbian Central Bank pointed out that the Chinese yuan is the fifth most traded international currency on the global financial market, also the fifth most used currency in global payments, as well as the sixth currency in terms of participation in global foreign exchange reserves.
"This is the result of the systematic encouragement of the use of the Chinese yuan as a payment and trading currency by the Chinese state, with the aim of supporting its internationalization, which also led to the fact that in October 2016, the yuan was among the currencies that make up the basket of currencies of the Special Drawing Rights (SPV) ) of the International Monetary Fund (IMF), and that participation was additionally increased by last year's audit", the NBS added.
"The aforementioned documents define that the currency structure of foreign exchange reserves is determined in accordance with the currency structure of Serbia's external debt, which is the practice of many central banks." This ensures the so-called natural hedging to the greatest extent - protection against currency risk", specified the NBS.
According to the institution, the National Bank of Serbia actively monitored the Chinese financial market in the previous period and analyzed investment opportunities in that market.
MJ/RSE
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