China could move closer to letting its currency float more freely if it was easier for the renminbi to join the mechanism that underpins the International Monetary Fund’s own reserve currency, the German government said on Thursday.

Clearer rules for joining the currency basket behind the IMF’s special drawing rights (SDRs) “would increase the incentives for emerging market countries to promote greater internationalisation of their currency”, according to J?rg Asmussen, deputy finance minister. The IMF holds SDRs, underpinned by dollar, euro, yen and pound, as its reserve currency.

Speaking at a closed-door session of G20 policymakers and central bankers, Mr Asmussen threw Germany’s weight behind calls by China, Brazil and France to widen the pool of currencies behind SDRs beyond the current quartet. China in 2008 suggested that SDRs could eventually replace the US dollar as a global reserve currency and said that the renminbi and other developing countries’ currencies should be better represented in the underlying basket.