Chinese Currency Accountability Act of 2023

Floor Speech

Mr. Speaker, I rise in support of H.R. 510, the Chinese Currency Accountability Act of 2023, sponsored by Representative Davidson. This bill is related to the International Monetary Fund's Special Drawing Rights, known as SDRs, and the influence of China's currency in the SDR program.

SDRs are international assets created by the International Monetary Fund, the IMF, to supplement member countries' foreign exchange reserves, and they can enable member countries to reduce their reliance on domestic or external debt when building those reserves.

SDRs can be converted into government-issued currency, such as the dollar, the yuan, or the pound, assuming that there are not sanctions or other prohibitions that would prevent such financial transactions.

The value of an IMF member's SDRs is defined by a basket of currencies, which are a mix of five globally important currencies, sometimes called fiat currencies in that they are issued by governments or, in the case of a euro, an association of governments. Those five currencies that are behind the SDRs are the U.S. dollar, the euro, the Chinese yuan, the Japanese yen, and the British pound.

The key thing here is that the percentage of that basket that is comprised of the Chinese currency was increased in 2022 and now is at 12 percent of the total, compared to the U.S. dollar, which is at 43 percent of the total.

The bill would require the Treasury Secretary to oppose at the IMF any future percentage increase in the weight of the Chinese currency in that SDR currency basket. The bill would allow a waiver of such provision to the executive branch should the Secretary of the Treasury be able to certify to Congress that China meets certain standards.

Those standards include that China is in compliance with all of its obligations under article VIII of the Articles of Agreement of the IMF; second, that there has not been certain reports submitted in the prior 12 months indicating that China is engaging in currency manipulation; and, third, that China is adhering to the rules and principles of the Paris Club and the OECD Arrangement on officially supported export credits.

Mr. Speaker, I will note that the Department of the Treasury has expressed some concerns about this bill, especially due to the fact that the Department of the Treasury does not have visibility into China's confidential provisions of data to the IMF and may not be able to independently certify that China is complying with the IMF and other global obligations.

As a result, China has indicated that it may be difficult to certify whether China has met the standards outlined in that bill that underlie the possibility of a waiver of its provisions.

These are reasonable concerns. Democrats on the Financial Services Committee have urged our Republican colleagues to work to improve the bill before it is finally enacted into law. That might include allowing the Department of the Treasury to rely on certifications from the IMF as to whether China is meeting its responsibilities looking at that confidential information that is provided by China to the IMF.

In any case, this bill moves us forward. I am sure that, through the legislative process, there will be some improvements.

Mr. Speaker, I urge my colleagues to support this bill, and I reserve the balance of my time.

Mr. Speaker, in an effort to expand both its economy and global influence, China has been accused of manipulating its currency. Concerns about this abound and have been well expressed by Mr. Davidson. This is especially concerning when it regards items that affect American interests at international institutions, such as the IMF.

This bill would empower the Department of the Treasury to address that issue and, in fact, require them to address that issue. I think that it is going to be an effective tool for us to deal with China, an important nation that doesn't always play by the rules.

Mr. Speaker, I urge my colleagues to support this bill, and I yield back the balance of my time.

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