BEIJING (AP) - 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
The comments, in an essay by the Chinese central bank governor
released late Monday, reflects 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
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
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. government debt.
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
Independent economists have suggested creating a new reserve
currency to reduce reliance on the dollar but acknowledge that
would face obstacles. It would need acceptance from governments
that have relied on the dollar for decades and hold huge stockpiles
of U.S. currency.
China has pressed for changes to give developing countries more
influence in the IMF, the World Bank and other finance bodies. G20
finance officials issued a statement at their last meeting calling
for such changes but gave no details of how that might happen.
Russia also has called for such reforms and says it will press
its case at the London summit.
Zhou said the new currency would let governments manage their
economies more efficiently because its value would not be
influenced by any one nation's need to regulate its own finance and
"A super-sovereign reserve currency managed by a global
institution could be used to both create and control global
liquidity," Zhou wrote. "This will significantly reduce the risks
of a future crisis and enhance crisis management capability."
Zhou also called for changing how SDRs are valued. Currently,
they are based on the value of four currencies - the dollar, euro,
yen and British pound.
"The basket of currencies forming the basis for SDR valuation
should be expanded to include currencies of all major economies,"
Zhou wrote. "The allocation of the SDR can be shifted from a
purely calculation-based system to one backed by real assets, such
as a reserve pool, to further boost market confidence in its
Chinese central bank (in English):