Evans-Pritchard says the pace of outflows in China would accelerate if there was a view the yuan was going to depreciate.

"If there was a perception the government was deliberately driving down the value of the yuan as a long-term policy, this could accelerate out of control and they would have to drain their reserves to defend the currency," he says.

"By doing so they would automatically tighten domestic monetary policy which carries the risk of creating a credit crunch."

With China already a huge economy, many believe the government has no option but to prepare its currency to join the SDR and become a global reserve currency

Williams at Capital Economics says such a status for a currency is no panacea and brings with it responsibilities it may prefer not to have.

"It's not obvious that having a global reserve currency in itself does a country any good - in fact, countries such as Germany and Japan in the past tried to stop their currencies being used internationally because they feared it would cause them to appreciate and hurt their export sectors."

He believes, however, it could be a useful discipline for China in its current state of development.

"In pushing to achieve reserve currency status, policymakers would have to push through reforms to financial markets, making them more open and transparent, that over the long run would deliver benefits to China's economy," he says.

The move on the yuan has already opened another debate on when China's capital markets will be fully open, which would require full convertibility of the yuan. HSBC has predicted this may happen as early as 2020.

Candy Ho, managing director and global head of RMB business development and markets at HSBC in Hong Kong, contends the move is consistent with that.

"With the PBOC also signaling further foreign exchange reforms, such as the extension of the Chinese yuan trading hours and promoting convergence between the onshore and offshore exchange rates, it is clear that China is committed to making the RMB fully convertible sooner rather than later."

Innes-Ker at the EIU believes it is wrong to expect something dramatic.

"This is not the sort of thing where you wake up one morning and suddenly you are there. It is a much more gradual process," he adds

He believes important initiatives have been the Stock Connect Scheme, creating a trading link between Hong Kong and Shanghai and making it easier for foreigners to buy Chinese shares, and he anticipates a further extension of the QFII, or Qualified Foreign Institutional Investor, a quota program that facilitates currency movements in and out of the country.

"This latest move on currency could be another of those key steps."

andrewmoody@chinadaily.com.cn