International Monetary Fund chief Dominique Strauss-Kahn has proposed expanding the IMF’s basket of currencies to include China’s yuan, in a move he said would promote monetary stability.

Strauss-Kahn, in a speech about reforming the international monetary system, said that the role of the fund’s international reserve asset, known as ‘special drawing rights’, could be enhanced in an effort to promote global financial stability.

A key move would be expanding the SDR basket, which currently includes four major currencies: the dollar, euro, yen and pound.

“Adding emerging market currencies, such as the renminbi, could help the process of internationalisation of these currencies, which would benefit the system as a whole,” Strauss-Kahn said at an IMF panel discussion, referring to the official name of the Chinese yuan.

“When we worry about the deficiencies of the international monetary system, we are mostly worrying about volatility: a sense that money sometimes flows around the globe in too volatile a fashion, and that countries need a more stable, more predictable external environment in order to prosper.”

The IMF chief laid out a series of proposals made in an IMF report published on Thursday to enhance and expand the role of SDRs, “to contribute to a more stable international monetary system”.

SDRs were created in 1969 to serve as an international reserve asset alongside gold and the dollar, but they have never been a major factor in the global system.