The announcement that the renminbi meets the International Monetary Fund’s criteria as a “freely usable” currency will have come as no surprise to those who have followed China’s unprecedented steps to open up its capital markets.

It means a technical hurdle on the renminbi’s ascent as a global currency has been cleared away and makes it near certain that the IMF executive board will include the Chinese currency into its Special Drawing Rights (SDR) basket of currencies, effective from October 1 next year.

A monumental milestone for the renminbi, this event would trigger significant but gradual inflows of funds into the currency, changing the global currency landscape forever, as central banks, sovereign wealth funds (SWFs) and multilateral institutions recalibrate their balance sheets.