First Time Ever: PRC Reports Reserve Holdings to IMF

♠ Posted by Emmanuel in ,, at 10/01/2015 01:30:00 AM
Sucking up to the IMF in all sorts of ways--now including reporting on forex reserves.
"Transparency" and "Chinese officialdom" are strangers to one another. That said, the PRC seems to be making improvements in one regard: After years of obfuscation, PRC authorities have only just begun reporting reserve data to the IMF Composition of Foreign Exchange Reserves (COFER). Previously, they furnished no data whatsoever--nada, zilch, zip, diddly-squat. But, all that changed recently with China partially--repeat, partially--reporting on its reserves.

How "partial" are we talking about? In aggregate, total reported reserves to the IMF jumped by $600 billion. Assuming that all the increase is due to China's new reporting, it falls well short of the $3.56 trillion it is believed to hold even with its recent sell-off of foreign exchange to slow the rate of yuan depreciation. From an earlier report in the WSJ:
The People’s Bank of China said Monday that its reserves fell by $93.9 billion, the biggest-ever monthly drop in dollar terms and the largest in percentage terms since May 2012. The decline in China’s foreign-currency reserves has accelerated, deepening a trend that illustrates the pressures of the country’s slowdown, rising capital outflows and expectations for monetary tightening in the U.S. China used its reserves to stabilize the yuan after the central bank devalued the currency on Aug. 11, a move that heightened worries about growth in the world’s second-largest economy and sparked a sharp selloff across global stock markets.

At $3.56 trillion as of the end of August, the currency reserves held by the PBOC still account for nearly one-third of all holdings by central banks world-wide. But the reserves have declined since a peak of nearly $4 trillion in June 2014 as more money leaves the country
Now, Dow Jones newswires reports on China's COFER contribution:
China has begun to report its currency reserves to the International Monetary Fund for the first time—a milestone in opening a key facet of the country's economy to the public view. The move comes as Beijing seeks to have its currency, the yuan, included in the basket of reserve currencies that comprise the fund's lending instrument.

The IMF said China has reported a "representative portfolio on a partial basis," meaning that what it has shared represents the fractional breakdown of its holdings of different currencies. China will gradually report its full foreign-exchange holdings over two to three years, the IMF said.

Reported currency reserves world-wide jumped by around $600 billion with China's new data. The IMF's numbers don't reveal how much each of the reporting countries holds. But based on the fund's breakdown of the aggregated share of different currencies held, it seems China's portfolio matches most central-bank holdings: roughly 60% dollars and 20% euros and pounds sterling—with the Japanese yen and other major currencies making up the difference.
So approximately $600B reported out of about $3.5T is, in the bigger picture, just a fraction of China's entire forex holdings. But then again, it's a start given how secretive the Chinese are. The prize the Chinese are after remains IMF inclusion of the yuan in the SDR basket of currencies:
To win reserve-currency status China has begun to liberalize its exchange-rate regime and provide more transparency about its currency policies. Last year China committed to providing more details about its reserve holdings, an effort that will allow economists to better gauge the degree to which the country is intervening in its exchange rate. China now discloses its foreign-exchange reserves every month, whereas in the past it reported the figures quarterly. It also has started to disclose its holdings of gold every month.
You didn't think the Chinese were doing this out of the goodness of their hearts, did you?