Source: CCTV.com

03-24-2009 11:13

Special Report:   Global Financial Crisis

Calls to reform the International Monetary Fund, have gathered momentum since the global financial crisis began. China wants the creation of a new currency to eventually replace the US dollar as the global benchmark.

Calls to reform the International Monetary Fund, have  gathered momentum since the global financial crisis began.

Central bank governor Zhou Xiaochuan made the currency proposal in an essay released on Monday. It comes amid preparations for the G20 summit in London next week.

In his paper, Zhou Xiaochuan calls for a reduction in the dominance of a few individual currencies in international trade and finance. He points out that moving to a reserve currency that belongs to no individual country would make it easier for all nations to manage their economies better. He says it would give the reserve currency countries more freedom to shift monetary policy and exchange rates.

In the essay, Zhou Xiaochuan says the re-establishment of a new and widely accepted reserve currency with a stable valuation benchmark may take a long time.

He adds that in the short term, the use of special drawing rights, or SDRs, should be expanded. An SDR is a kind of synthetic currency created by the IMF in the 1960s. Its value is determined by a basket of major currencies. Zhou Xiaochuan suggests countries could increase their contributions to the IMF in exchange for greater access to a pool of reserves in SDRs.

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Editor:Qin Yongjing