The International Monetary Fund’s five-yearly review of which currencies should constitute its Special Drawing Rights may seem a dry technical exercise. But a great deal more hinges on the decision than the internal accounts of the Washington-based institution.

For the second time since 2010, the IMF is scheduled in November to raise or lower its thumb as to whether to include the renminbi along with the dollar, the yen, the euro and sterling in the basket of so-called SDR currencies. It is on the surface an arcane distinction. SDRs are a synthetic unit of account used by the IMF to allocate assets among member countries. They are neither used for international trade deals, nor does their existence preclude central banks from holding reserves in other widely circulated currencies.

What gives the application its political piquance is Beijing’s hunger to garland the RMB with the status of being an internationally-badged reserve currency. Indeed, so sensitive are the politics that great attention has been paid to an internal IMF report suggesting China might not meet the entry criteria, and proposing an extension to the existing basket until September 2016.

Adding the “redback” to the basket would be a powerful piece of symbolism. It comes when Beijing is increasingly asserting its independence from the world’s financial architecture, establishing new regional organisations such as the Asian Infrastructure Investment Bank which it claims are more suited to meet local needs as well as having the less-bruited benefit of being more amenable to its influence.

China has visibly chafed at the governance of the existing institutions, complaining that they are insufficiently open to voices from the developing world. To be fair, some of the complaints are not without substance, not least those concerning voting rights in the Bretton Woods bodies. The risk is that rejecting its application for SDR status might deepen China’s estrangement from western institutions.

There are plenty of reasons not to wish a further fracturing of the global financial system. Of course the IMF should not bend the rules to ease Chinese entry. The RMB must credibly meet the IMF’s criteria. It is to be welcomed that the basket extension is only to aid reserve managers, and not to give Beijing more time to fulfil the criteria.

China is in any case not far from meeting the requirements. It is already a major currency for trade and investment. The government has eased capital controls and liberalised financial markets. One particular bugbear was removed in May when the IMF declared that China’s currency was no longer undervalued relative to the dollar to which it has been loosely pegged.

Two concerns do still raise doubts. One is whether the RMB meets the criteria laid down obliging it to be “freely usable”. Requirements such as the need for China to increase foreign access to markets and further open its capital account may have been hampered by the spectacle of Beijing’s Sisyphean attempts to buoy a slumping stock market over the last two months.

Aside from the question of eligibility, the IMF must also wrestle with the diplomatic consequences from a potential rearrangement of the top table. Were China to be inducted it would need a weighting in the SDR basket commensurate with its trading heft, giving it a whopping 13 per cent against the 6.7 per cent currently held by Japan.

China’s SDR accession is not a done deal. But whatever the monetary cards turn up in November, the direction is clear. China should get its financial governance in order, while the developed world must adjust and grow comfortable with a rising financial power.