China's yuan moved one step closer to joining other top global currencies in the International Monetary Fund's benchmark foreign exchange basket on Friday. It happened after Fund staff and IMF chief Christine Lagarde gave the move the thumbs up.

The recommendation sets the way for the Fund's executive board, which has the final say, to place the yuan on a par with the U.S. dollar, Japanese yen, British pound and euro at a meeting that is scheduled for Nov. 30, reported Reuters.

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Joining the Special Drawing Rights (SDR) basket would be a victory for Beijing, which has campaigned hard for the move, and could increase demand for the yuan among reserve managers as well as mark a symbolic coming of age for the world's second-biggest economy.

IMF staff had found out that the yuan, also known as the renminbi (RMB), met the criteria of being "freely usable," or widely used for international transactions and widely traded in major foreign exchange markets, Lagarde said.

"I support the staff's findings," she said in a statement immediately welcomed by China's central bank. The People's Bank of China (PBOC) said it hoped the international community would also back the yuan's inclusion.

Staff also gave the green light to Beijing's efforts to address operational issues identified in a report in July, Lagarde said.

According to Radio Biafra, the executive board, which represents the Fund's 188 members, is seen as unlikely to go against staff recommendation and countries including France and Britain have already pledged their support for the change. The changes would take effect in October 2016, during China's leadership of the Group of 20 bloc of advanced and emerging economies.

China has rolled out a flurry of reforms recently to liberalize its markets and also help the yuan meet the IMF's checklist, including scrapping a ceiling on deposit rates, issuing three-month Treasury bills weekly and improving the transparency of Chinese data.

Economists said with the yuan's inclusion in the IMF basket as a reserve currency is now looking like a formality. China has also been encouraged to step up efforts to build trust between global investors and its policy makers.

China's heavy-handed intervention to stem a stock market rout over the summer, and an unexpected devaluation of the yuan in August, had raised some doubts about Beijing's commitment to reforms.

Singapore-based Commerz bank economist Zhou Hao said China needs to further accelerate domestic reforms and improve policy transparency.

"The PBOC should reduce the frequency of market intervention, allowing market forces to really play a critical role," he said.

The United States, the Fund's biggest shareholder, has said it would back the yuan's inclusion if it meets the IMF's criteria, a U.S. Treasury spokesperson said, adding that "We will review the IMF's paper in that light."

According to Jenkers, if the yuan's addition wins 70 percent or more of IMF board votes, it will be the first time the number of currencies in the SDR basket - which determines the composition of loans made to countries such as Greece - has been expanded.

"I would say that the likelihood of China's yuan joining the IMF currency basket this year is very high," said Hong Kong-based Shen Jian guang, chief economist at Mizuho Securities Asia.

"The only thing that could deter this is if the U.S. led a group rejecting the yuan's inclusion, which could complicate things. But the United States' current official stance does not reflect such an attitude," he said.

Currency analysts say making the yuan the fifth currency in the basket could eventually lead to global demand for the currency worth more than $500 billion.

The People's Bank of China said the statement from IMF staff is an acknowledgment of the progress China had made in reforms and opening up its economy.

"The inclusion of the RMB in the SDR basket would increase the representativeness and attractiveness of the SDR, and help improve the current international monetary system, which would benefit both China and the rest of the world," the PBOC said in a statement.

The board's decision would be respected by China and the country would continue to deepen economic reforms, the PBOC said.

TagsChina's yuan, International Monetary Fund, Special Drawing Rights (SDR), China's central bank, Zhou Hao, China joins IMF currency basket