The IMF's executive board agreed to add the yuan, also known as the renminbi, to its Special Drawing Rights (SDR) basket alongside the dollar, euro, pound sterling and yen. The addition will take effect Oct. 1, 2016, the IMF said.
The yuan would have a 10.92 percent weighting in the basket. Weightings will be 41.73 percent for the dollar, 30.93 percent for the euro, 8.33 percent for the yen and 8.09 percent for the British pound.
The decision is a “recognition of the progress that the Chinese authorities have made in the past years in reforming China’s monetary and financial systems,” Lagarde said Monday.
The decision to add the yuan will likely increase demand for the currency and marks another step in China's global economic emergence. China is the world's second largest economy behind the US and asked for the yuan to become a reserve currency last year.