The yuan has become the first SDR basket currency to belong to a country that is not a clear U.S. ally -- the other slots being taken up by Japan, the United Kingdom and the eurozone. This is important because it is part of a wider trend, reflecting increased economic power in new parts of the world. The IMF (along with the World Bank) is the key institution of the world order that was designed by the United States and its allies at Bretton Woods in 1944. The IMF's inclusion of the yuan in the SDR coincides with an attempt to reform this system in favor of these new powers -- an attempt that the United States has stalled with a veto for five years. The important question, then, is how the United States, as architect and leader of the existing system, will cope with these new challenges....
