|China Wants A New Global Currency
by The Associated Press
NPR.org, March 24, 2009 · China is calling for a new global currency
controlled by the International Monetary Fund, stepping up pressure
ahead of a London summit of global leaders for changes to a financial
system dominated by the U.S. dollar and Western governments.
The comments, in an essay by the Chinese central bank governor
released late Monday, reflect Beijing's growing assertiveness in
economic affairs. China is expected to press for developing countries
to have a bigger say in finance when leaders of the Group of 20 major
economies meet April 2 in London to discuss the global crisis.
Gov. Zhou Xiaochuan's essay did not mention the dollar by name but
said the crisis showed the dangers of relying on one nation's currency
for international payments. In an unusual step, the essay was
published in both Chinese and English, making clear it was meant for
an international audience.
"The crisis called again for creative reform of the existing
international monetary system towards an international reserve
currency," Zhou wrote.
A reserve currency is the unit in which a government holds its
reserves. But Zhou said the proposed new currency also should be used
for trade, investment, pricing commodities and corporate bookkeeping.
Beijing has long been uneasy about relying on the dollar for the bulk
of its trade and to store foreign reserves. Premier Wen Jiabao
publicly appealed to Washington this month to avoid any steps in
response to the crisis that might erode the value of the dollar and
Beijing's estimated $1 trillion holdings in Treasuries and other U.S.
The currency should be based on shares in the IMF held by its 185
member nations, known as special drawing rights, or SDRs, the essay
said. The Washington-based IMF advises governments on economic policy
and lends money to help with balance-of-payments problems.
Some economists have suggested creating a new reserve currency to
reduce reliance on the dollar but acknowledge it would face major
obstacles. It would require acceptance from nations that have long
used the dollar and hold huge stockpiles of the U.S. currency.