Special Report: Global Financial Crisis
BEIJING, March 27 (Xinhua) -- As the current global
financial crisis exposes the inherent vulnerabilities and risks in the existing
international monetary system, debates on creating a super-sovereign reserve
currency are getting heated.
Voicing his opinion, Zhou Xiaochuan, China's central
bank governor, said in an article published Monday that a new super-sovereign
reserve currency should replace national reserve currencies as the backbone of
the global monetary system.
Zhou argued that a new global reserve currency, based
on a basket of major currencies and managed by a multilateral organization like
the IMF, would transcend the national interest of reserve currency printing
countries and contribute to the stability of the international financial system
and the development of world economy.
John Lipsky, IMF first deputy managing director,
called the idea of a new global reserve currency a "serious proposal."
It is "natural" to discuss a new global monetary
system in the wake of the devastating financial crisis, he told a news
conference in Washington on Tuesday
Just as Zhou said, "the frequency and increasing
intensity of financial crisis following the collapse of the Bretton Woods system
suggest that the costs of such a system to the world may have exceeded its
benefits. The price is growing even higher, not only for the users, but also for
the issuers of the reserve currencies."
He also proposed to expand the role of the Special
Drawing Right (SDR) created by the IMF in 1969 in international trade,
commodities pricing, investment and corporate bookkeeping.
Zhou's argument is part of a bigger international
debate on reforming the global monetary system.
The United Nations and some major emerging economies
have been calling for overhauling the global monetary system to make sure
financial crises like the current one will not haunt the world economy again in
years to come.
A panel of UN-appointed economic experts called this
week for anew global reserve system using a broad basket of world currencies as
one of the longer-term reforms to rebuild the global monetary system.
The panel, led by Nobel Prize-winning economist
Joseph Stiglitz of the United States, said the dangers of a single-country
reserve system have long been recognized, as the accumulation of debt undermines
confidence and stability.
Russian officials said last week that the country
would come up with a proposal for a new international reserve currency at the
upcoming meeting of leaders of G20 countries scheduled for April 2in London.
The proposal was supported by some other emerging
economies like Brazil, India, South Korea and South Africa, according to Russian
officials.
Although the United States, issuer of the U.S. dollar
which composes more than 60 percent of world reserve currency, has brushed aside
the need for a new global reserve currency, it won't block fresh ideas about
reforming the global monetary system, analysts say.
"I'm sure the discussion will continue on this and
other approaches to improve the working of the international system," Lipsky
said.
Vanessa Rossi, a senior research fellow in
international economics at the Chatham House think tank in London, said: "If you
look over the next few years, many countries ought to welcome this possible move
(to create a new global reserve currency)."
"It ought to relieve some of
that pressure we've seen over the past years," he told Radio Free Europe.
PBC governor praises China's financial
policy, analyzes flaws of Western model
BEIJING, March 26 (Xinhua) -- China's central bank
governor has spoken highly of the government's rapid responses to the current
global financial crisis, featuring decisively adopting a proactive fiscal policy
and an adaptively easing monetary policy, and launching a bundle of timely,
targeted and temporary policies and measures.
The prompt, decisive and effective policy measures
adopted by the Chinese government demonstrates "its superior system advantage
when it comes to making vital policy decisions," says Zhou Xiaochuan, president
of the People's Bank of China (PBC), in an article entitled "Changing
Pro-cyclicality for Financial and Economic Stability." Full story
Central bank governor: multi-therapy
needed to bring down high savings rate
BEIJING, March 26 (Xinhua) -- To
bring down the high savings rate in China calls for a more comprehensive therapy
which combines domestic reform and international efforts, than a simple change
of exchange rate, said central bank governor Zhou Xiaochuan in his recent essay.
Though many people believed a certain price, such as
the exchange rate or the interest rate, would decide the choice between saving
and consumption, the savings rate was in fact under the influence of many other
factors, and it would be an over-generalization to assume that a change in
exchange rate could largely bring down the savings rate, Zhou said in an essay
published on the website of the People's Bank of China (PBOC). Full story
China central bank governor suggests
creating super-sovereign reserve currency
BEIJING, March 24 (Xinhua) -- Zhou
Xiaochuan, governor of China's central bank, has proposed to create a
super-sovereign reserve currency as part of reform in the international monetary
system.
The desirable goal of the international monetary
system is to "create an international reserve currency that is disconnected from
individual nations and is able to remain stable in the long run, thus removing
the inherent deficiencies caused by using credit-based national currencies," he
said. Full story
