China’s central bank said the G20 summit next week needed to discuss currency reform amid concern US policies may weaken the dollar, hurting owners of assets denominated in the currency.
“We expect world leaders to pay more attention to reforming the global currency system,” Zhang Jianhua (張建華), head of research at the People’s Bank of China, told an economic forum in Beijing yesterday. “The dollar is facing a big problem and US policies will potentially weaken the currency.”
Chinese Central Bank Governor Zhou Xiaochuan (周小川) this week called for the creation of a new international reserve currency. His comments prompted US Treasury Secretary Timothy Geithner to defend the dollar’s status.
China will “closely monitor whether and how the Federal Reserve will soak up increased liquidity” to avoid spiraling inflation and currency weakness, Zhang said.
G20 leaders meet next week in London to look for ways to alleviate the global financial crisis and strengthen international regulation.
“Though China is not yet ready to play a leading role in the summit, we will definitely be an important participant,” Zhang said. “Governor Zhou’s super-sovereign reserve currency proposal may not be unanimously recognized, but if it can lead to a greater range of discussions at the G20, that’s also a success.”
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